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 . 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