Individual Development Accounts IDA

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Individual Development Accounts (IDA)
Low-income Families Building Healthy Futures
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History

• Emerged in early 1990s
• Tool for alleviating poverty
• 1993 Iowa first state to enact IDA law
• Now 39 states plus the District of Columbia have
  laws or policies
• 23 states plus the District of Columbia provide
  support for IDAs
• Estimated 500 to 600 IDA programs

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What Are IDAs?

• Matched savings accounts
• Low-income families
• Specific goals

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Matched Savings Accounts

• Designed in a similar fashion to 401(k)
  retirement accounts
• for match up to 8 for 1 match
• Depends on program rules
• State and Federal Laws with appropriation

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Matched Savings Accounts

• Matching funds come from
• State funds
• Private sources
• Assets for Independence Act (AFIA)
• Temporary Assistance for Needy Families (TANF)
• Community Development Block Grants (CDBG)

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Low-Income Families

• Who is eligible?
• Families and/or individuals
• Generally earning income
• Generally income less than 200 of federal
  poverty level
• Some funding sources require an asset test

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Specific Goal

• Must have specific goal
• If AFIA matching funds only 3 goals
• Buy a home
• Pay for post-secondary education
• Start or expand a small business
• Other funding sources allow for a variety of
  goals such as home repairs or automobile purchase

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Other Requirements

• May have credit or debt limitations
• Time limit on savings states and programs
  dictate
• Must take free asset-specific financial training

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Probable Concerns

• Will this affect a persons SSI?
• Any program designed similar to AFIA and TANF (no
  individual access to account funds) are sheltered
• SSI may increase
• Earnings invested in the IDA not counted as
  income
• Matching amounts also not counted
• IDAs sheltered from inclusion in resources
• IDA can be part of a PASS

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Probable Concerns

• Will this affect a persons SSDI?
• No restrictions for SSDI recipients
• Can participate in any IDA program
• How much can be saved?
• Usually 2,000 per year PASS more
• What about taxes?
• Interest on participants saving is taxable
• Match funds are a gift and NOT taxed

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Resources

• www.wid.org
• www.cfed.org
• www.idanetwork.org
• http//gwbweb.wustl.edu/csd

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Presented by

• Real Economic Impact Tour
• Name
• Contact Info
• www.reitour.org