text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Preserve Rights Of States and 
  Political subdivisions to Encourage Retirement Savings Act'' or the 
  ``PROSPERS Act''.
  
  SEC. 2. DEFINITIONS.
  
      Section 3 of the Employee Retirement Income Security Act of 1974 
  (29 U.S.C. 1002) is amended--
              (1) in paragraph (2)--
                      (A) in subparagraph (A), by striking ``subparagraph 
                  (B)'' and inserting ``subparagraphs (B) and (C)''; and
                      (B) by adding at the end the following:
      ``(C)(i) The terms `employee pension benefit plan' and `pension 
  plan' do not include an individual retirement plan (as defined in 
  section 7701(a)(37) of the Internal Revenue Code of 1986) established 
  and maintained pursuant to a payroll deduction savings program of a 
  State or qualified political subdivision of a State, provided that--
              ``(I) the program is specifically established pursuant to 
          State or qualified political subdivision law;
              ``(II) the program is implemented and administered by the 
          State or qualified political subdivision establishing the 
          program (or by a governmental agency or instrumentality of 
          either), which is responsible for investing the employee 
          savings or for selecting investment alternatives for employees 
          to choose;
              ``(III) the State or qualified political subdivision (or 
          governmental agency or instrumentality of either) assumes 
          responsibility for the security of payroll deductions and 
          employee savings, including by requiring that amounts withheld 
          from wages by the employer be transmitted to the program 
          promptly and by providing an enforcement mechanism to assure 
          compliance with this requirement;
              ``(IV) the State or qualified political subdivision (or 
          governmental agency or instrumentality of either) adopts 
          measures to ensure that employees are notified of their rights 
          under the program, and creates a mechanism for enforcement of 
          those rights;
              ``(V) participation in the program is voluntary for 
          employees;
              ``(VI) all rights of the employee, former employee, or 
          beneficiary under the program are enforceable only by the 
          employee, former employee, or beneficiary, an authorized 
          representative of such a person, or by the State or qualified 
          political subdivision (or governmental agency or 
          instrumentality of either);
              ``(VII) the involvement of the employer is limited to--
                      ``(aa) collecting employee contributions through 
                  payroll deductions and remitting them to the program;
                      ``(bb) providing notice to the employees and 
                  maintaining records regarding the employer's collection 
                  and remittance of payments under the program;
                      ``(cc) providing information to the State or 
                  qualified political subdivision (or governmental agency 
                  or instrumentality of either) necessary to facilitate 
                  the operation of the program; and
                      ``(dd) distributing program information to 
                  employees from the State or qualified political 
                  subdivision (or governmental agency or instrumentality 
                  of either) and permitting the State or qualified 
                  political subdivision (or governmental agency or 
                  instrumentality of either) to publicize the program to 
                  employees;
              ``(VIII) the employer contributes no funds to the program 
          and provides no bonus or other monetary incentive to employees 
          to participate in the program;
              ``(IX) the employer's participation in the program is 
          required by the law of the State law or qualified political 
          subdivision;
              ``(X) the employer has no discretionary authority, control, 
          or responsibility under the program; and
              ``(XI) the employer receives no direct or indirect 
          consideration in the form of cash or otherwise, other than 
          consideration (including tax incentives and credits) received 
          directly from the State or qualified political subdivision (or 
          governmental agency or instrumentality of either) that does not 
          exceed an amount that reasonably approximates the employer's 
          (or a typical employer's) costs under the program.
      ``(ii) A State savings program will not fail to satisfy the 
  requirements of subclauses (I) through (XI) of clause (i) merely 
  because the program--
              ``(I) is directed toward those employers that do not offer 
          some other workplace savings arrangement;
              ``(II) utilizes one or more service or investment providers 
          to operate and administer the program, provided that the State 
          (or governmental agency or instrumentality of the State) 
          retains full responsibility for the operation and 
          administration of the program; or
              ``(III) treats employees as having automatically elected 
          payroll deductions in an amount or percentage of compensation, 
          including any automatic increases in such amount or percentage, 
          unless the employee specifically elects not to have such 
          deductions made (or specifically elects to have the deductions 
          made in a different amount or percentage of compensation 
          allowed by the program), provided that the employee is given 
          adequate advance notice of the right to make such elections and 
          provided, further, that a program may also satisfy the 
          requirements of such subclauses (I) through (XI) without 
          requiring or otherwise providing for automatic elections such 
          as those described in this subclause.
      ``(iii) For purposes of this subparagraph, the term ``qualified 
  political subdivision'' means any governmental unit of a State, 
  including a city, county, or similar governmental body, that--
              ``(I) has the authority, implicit or explicit, under State 
          law to require employers' participation in the program as 
          described in clause (i); and
              ``(II) at the time of the establishment of the political 
          subdivision's payroll deduction savings program--
                      ``(aa) has a population equal to or greater than 
                  the population of the least populated State (excluding 
                  the District of Columbia and territories listed in 
                  paragraph (10));
                      ``(bb) has no geographic overlap with any other 
                  political subdivision that has enacted a mandatory 
                  payroll deduction savings program for private-sector 
                  employees and is not located in a State that has 
                  enacted such a program statewide; and
                      ``(cc) has implemented and administers a plan, 
                  fund, or program that provides retirement income to its 
                  employees, or results in a deferral of income by its 
                  employees for periods extending to the termination of 
                  covered employment or beyond.
      ``(iv) For purposes of clause (i)(III), amounts withheld from an 
  employee's wages by the employer are deemed to be transmitted promptly 
  if such amounts are transmitted to the program as of the earliest date 
  on which such contributions can reasonably be segregated from the 
  employer's general assets, but in no event later than the last day of 
  the month following the month in which such amounts would otherwise 
  have been payable to the employee in cash.''.
target: Preserve Rights Of States and Political subdivisions to Encourage Retirement Savings Act or the PROSPERS Act  This bill amends the Employee Retirement Income Security Act of 1974 (ERISA) to specify that states and certain political subdivisions may establish and administer voluntary payroll deduction retirement savings programs for private sector employees that are not considered employee pension benefit plans or pension plans covered by ERISA if the plans meet certain requirements.  The bill requires the plans to be established, implemented, and administered by states or political subdivisions. The plans must also be voluntary for employees and meet other specified requirements, including restrictions on the involvement of employers and obligations to enforce the rights of employees. 
feat_title: Preserve Rights Of States and Political subdivisions to Encourage Retirement Savings Act