Building Economic Futures for Americans with Disabilities
Real Economic Impact Tour
For Individuals with Disabilities & Their Families
What is an Individual Development Account?
An Individual Development Account, also known as an “IDA” is a savings account for modest income workers that can be used for small-business development, higher education or the purchase of a first home. Typically, in IDA programs, a low-income individual is offered a match for savings deposited into an account designated for post-secondary education (or another designated purpose). Matching funds are held in a separate account from the saver’s IDA. The match is made at the time of asset purchase, and given directly to the appropriate third party (e.g., the college or other training provider in the case of postsecondary education).Most Programs last from one to three years. The maximum amount of money you can save is $2,000 per year. But, how much you save depends on how much you deposit and what the match is. For example, if you deposit $25 every month for two years, you will save $600 on your own. If the IDA organization offers a 3:1 match, you will receive an additional $1,800 towards your savings goal. Thus, in two years you can save a total of $2,400.
Eligibility for an IDA is based upon which program a participant enrolls in, as each one may have slightly different requirements. To qualify for an IDA program an individual must:
- Be within 200% of the Federal Poverty Level ($20,420 annually for an individual in 2007); and
- Have earned income.
Additional requirements for IDA programs can include:
- Temporary Aid to Needy Families participation;
- Eligibility for the Earned Income Tax Credit
- Asset requirements; or
- Previous affiliation with an IDA program.
IDAs are usually used for three purposes:
- developing a business
- investing in higher education; or
- purchasing a first home.
However, some programs may allow you to save for other purposes, such as purchasing a car or computer. Check with the specific IDA Program you wish to participate in for further details.
The best part about the IDA is what you can accomplish with your new-found assets. Once accepted into an IDA Program, you will be required to take financial education training. The financial training can teach you how to:
- Reduce your debt;
- Develop a savings plan;
- Prepare for your savings goal;
- Research your credit history;
- Choose banking options;
- Invest; and
- Manage money.
You may also take workshops related to your savings goal, which will be offered in many of the REI Tour cities. These workshops may include small business development, college, or home ownership. Training may be in the form of one-on-one counseling, classroom training, peer support or online training.
IDA programs have different guidelines, so be sure to check with the specific program for eligibility requirements. To get started, you will need to find an IDA Program in your area. We suggest you contact the:
- IDA Network Directory - (http://www.cfed.org/focus.m?parentid=31&siteid=374&id=599);
- The Yellow Pages;
- or the World Institute on Disability’s Access to Assets Program: E-mail: equity@wid.org, or call 866-723-1201 toll free.
After you contact an organization, you will need to attend an orientation meeting. You will fill out a number of forms that ask about your financial and personal history. The IDA program will then determine your eligibility for the program.
Once accepted into the program you will open a savings account at a bank that is tied to the IDA organization. You will likely sign a contract that states how much money you plan to deposit into the account each month. When you have reached your savings goal, your IDA caseworker will confirm the purchase (or investment) and the matching funds will be released directly to a designated vendor, such as a college or mortgage company.