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Individual Development Account (IDA) - Overview

 

Logo graphic of Individual Development Account, showing coins and text 'Individual Development Account'This topic provides brief overview information about Individual Development Accounts (IDA) in a question and answer format.

What is an Individual Development Account (called an "IDA")?

An Individual Development Account (IDA) is a special bank account that helps you save for your education, the purchase of a first home, or to start a business. Other purposes are allowed in some States. A table showing which States have IDAs and for what purposes they may be used can be found in the topic Individual Development Account (IDA) - State Differences. You use earnings from your work to set up an approved bank account for an IDA.

How does an IDA help my money to grow?

You contribute money from your earnings from work. With an IDA, your contributions may be matched with money from your State's TANF (Temporary Assistance for Needy Families) program or from special funds called "demonstration project" money. Not all States provide matching funds, but if yours does, the matching money may help you reach your goal sooner. See the Individual Development Accounts (IDA) - State Differences topic and follow the link for a summary table that shows which States offer IDAs and which of those match contributions.

Who is eligible for an IDA?

          If you are working and receiving TANF payments, you may be eligible for a TANF IDA. (Not every State currently offers a TANF IDA.)

          If you are working and either receiving TANF or have low income and assets, you may be eligible for a demonstration project IDA.

          Most states use the eligibility criteria that individuals with a family household income at or less than 200% of the Federal Poverty Guidelines may qualify for an IDA.

How will a TANF IDA and Demonstration Project IDA affect my SSI?

Your SSI benefit will not go down--it might even go up! This is because the earnings, the matching money, and the interest that goes into your IDA do not count as your income or resources when SSA figures your SSI. Similarly, your IDA does not count as income or resources for other Federal means-tested programs such as Food Stamps, TANF, and Medicaid.

NOTE: As of May 2003, the SSA Office of Employment Support Programs has confirmed that there is no Federal prohibition from being simultaneously eligible for both TANF and SSI. However, most States have a prohibition in place. In addition, there may be complicating circumstances in States that prohibit dual entitlement where an individual received TANF and then is retroactively awarded SSI. For more information about dual entitlements, contact your State TANF Agency and/or contact your local SSA office.

 

NOTE: On July 18, 2005, SSA issued Final Rules amending the SSI regulations by making technical revisions to rules on income and resources based on the Social Security Protection Act (SSPA) of 2004 and several other statutory changes. These revisions, among other things, clarify that certain types of unearned income are excluded when determining SSI unearned income and resources. These include unearned income from the following sources:
(1) Any matching funds and any interest earned on matching funds in an Individual Development Account (IDA), as provided for by the Community Opportunities, Accountability, and Training and Educational Services Act of 1998. These IDAs are funded by a demonstration project authorized by Public Law 105-285.
(2) Any earnings, TANF matching funds, and interest in an IDA, as provided for by section 103 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996.
For more information see:
http://www.ssa.gov/regulations/articles/rin0960_ae79f.htm

Where can I find out more about IDAs?

Contact your State TANF agency.

Additional Information

A report, "Individual Development Account Programming, Policies, and Resources", contains an overview, background material, current IDA trends and policies, recent IDA research findings, the Federal perspective on IDA programs and lessons learned from established as well as newly formed State and local programs. The full text of the joint DOL/DHHS workshop summary report is available for viewing and printing in PDF format (requires Adobe Acrobat Reader) at:
http://peerta.acf.hhs.gov/taevents/pdf/idareport.pdf

A table showing which States have IDAs and for what purposes they may be used can be found in the topic Individual Development Account (IDA) - State Differences.

On the IDAnetwork's website, you can find information and ideas about how IDA initiatives and policies enable low-income families and individuals to save, build wealth, and contribute to the nationís continued economic growth. The website URL is:
http://www.cfed.org/programs/idas/

A briefing book, which was developed by the Corporation for Enterprise Development (CFED) in conjunction with the Center on Budget and Policy Priorities (CBPP), aims to explain the treatment of Individual Development Accounts in Federal programs affecting low-income people. Titled "2002 Federal IDA Briefing Book; How IDAs Affect Eligibility for Federal Programs", it is available in PDF format (requires Adobe Acrobat Reader) at:
http://www.cbpp.org/10-29-02wel.pdf

See also:

Individual Development Account (IDA) - Details

Individual Development Account (IDA) - Definitions

Individual Development Account (IDA) - Assets for Independence Program

Source

Information for this topic was drawn from the SSA website at:
http://www.socialsecurity.gov/notices/supplemental-security-income/spotlights/spot-individual-development.htm


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