Preserve Rights Of States and Political subdivisions to Encourage Retirement Savings Act

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.''.

Summary: 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.