TN 246 (09-24)

SI 00830.670 Individual Development Accounts (IDAs) -- Demonstration Project

CITATIONS: Sections 404-416 of P.L. 105-285 (The Assets for Independence Act); 42 U.S.C. 604 Note; Section 415 of P.L. 106-554 (The Consolidated Appropriations Act, 2001)

A. Background

1. What is an individual development account (IDA)?

An IDA is a special bank account that helps an individual save for their education, the purchase of a first home, or to start a business. An individual uses earnings from their work to set up an approved bank account for an IDA.

2. How does a demonstration project IDA help an individual's money to grow?

An individual contributes money from their earnings to an IDA. An individual's contributions are matched with money from special funds called “Demonstration Project” money. The matching money helps the individual reach their goal sooner.

3. Who is eligible for a demonstration project IDA?

If an individual is working and either receiving Temporary Assistance for Needy Families (TANF) OR has low income and assets, they may be eligible for a Demonstration Project IDA.

4. What is the statutory authority for demonstration project IDAs?

The Assets for Independence Act (enacted 1/27/98) created a federal Demonstration Project to test the effectiveness of IDAs in improving the lives of participating low-income persons. This Act provides for Demonstration Project monies to carry out a program to fund IDAs.

5. Who determines whether an individual is eligible for an IDA?

The agency that has been approved to authorize IDAs using Demonstration Project funds decides who is eligible for an IDA.

NOTE: The Social Security Administration (SSA) does not determine whether an individual is eligible for an IDA.

6. What federal agency oversees the IDA programs?

The Administration for Children and Families (ACF) oversees the TANF and Demonstration Project IDA programs. For more information on TANF IDAs, see SI 00830.665.

7. What other information is available about demonstration project IDAs?

A spotlight on IDAs is in http://www.socialsecurity.gov/ssi/spotlights/spot-individual-development.htm. See SI 00830.670E.4. for the procedure on responding to inquiries about Demonstration Project IDAs.

B. Definition of IDA terminology

The following definitions are for your information only. IDA agencies and organizations will apply these definitions to individual cases and determine IDA eligibility. Note that SSA does not determine whether an individual is eligible for an IDA.

1. Qualified entity

A qualified entity is:

  • A not-for-profit organization described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from taxation under section 501(a) of such code; or

  • A state or local government agency or a tribal government acting in cooperation with a not-for-profit organization.

2. Qualified purpose

A qualified purpose is one of the following:

  • Postsecondary educational expenses;

  • Business capitalization;

  • First home purchase.

3. Postsecondary educational expenses

Postsecondary educational expenses are:

  • Tuition and fees required for the enrollment or attendance of a student at an eligible educational institution; and

  • Fees, books, supplies and equipment required for courses of instruction at an eligible educational institution.

IMPORTANT: The charge for room and board, if any, is not a “fee” for purposes of this section. However, the charge for room and board can be an approvable expense under a Plan to Achieve Self-Support (PASS), see SI 00870.025B.5.g.

4. Eligible educational institution

An eligible educational institution is an institution that is described in section 101 or 102 of the Higher Education Act of 1965, or a postsecondary vocational education school (as defined in subparagraph (C) or (D) of section 521(4) of the Carl D. Perkins Vocational and Applied Technology Education Act (20 U.S.C. 2471(4)).

5. Qualified business capitalization expenses

Qualified business capitalization expenses are qualified expenditures for the capitalization of a qualified business pursuant to a qualified plan.

6. Qualified expenditures

Qualified expenditures are expenditures included in a qualified plan, including capital, plant, equipment, working capital, and inventory expenses.

7. Qualified business

A qualified business is any business that does not contravene any law or public policy.

8. Qualified plan

A qualified plan is a business plan that:

  • Is approved by a financial institution, a microenterprise development organization, or by a nonprofit loan fund having demonstrated fiduciary integrity, and

  • Includes a description of the services or goods to be sold, or a marketing plan and projected financial statements.

  • May require the eligible individual to obtain the assistance of an experienced entrepreneurial advisor.

9. Qualified first-time homebuyer

A qualified first-time homebuyer is an individual participating in the project involved (and, if married, the individual's spouse) who has had no ownership interest in a principal residence during the 3-year period ending on the date of acquisition of the principal residence.

10. Date of acquisition

The date of acquisition is the date on which a binding contract to acquire, construct, or reconstruct the principal residence is entered into.

11. Principal residence

A principal residence is a principal residence that costs no more than the limits set by the IDA project.

12. Tribal government

A tribal government is a tribal organization, as defined in section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b) or a Native Hawaiian organization, as defined in section 9212 of the Native Hawaiian Education Act (20 U.S. C. 7912).

C. Policy – effective 01-01-01

1. Contributions

Any earnings an individual contributes to their Demonstration Project IDA are deducted from their wages in determining countable income. An individual's contributions that are deposited in a Demonstration Project IDA are excluded from resources.

2. Matching funds

Any matching funds that are deposited in a Demonstration Project IDA are excluded from income and resources.

3. Interest

Any interest earned on the individual's own contributions and on the matching funds that are deposited in a Demonstration Project IDA is excluded from income and resources.

4. Disbursements

Disbursements from a Demonstration Project IDA can only be made for a qualified purpose (e.g., education, business capitalization or first home purchase) or for an allowable emergency (as determined by the IDA agency). Disbursements from a Demonstration Project IDA for a qualified purpose are excluded from income. Emergency withdrawals are loans and therefore are not income (SI 00815.350).

NOTE: The Demonstration Project IDA agency determines what constitutes a qualified purpose. Assume that all disbursements follow IDA rules.

D. Policy – prior to 01-01-01

1. Contributions

  • Any earnings an individual contributes to their Demonstration Project IDA are considered as part of their wages in determining countable income.

  • An individual's contributions that are deposited in a Demonstration Project IDA are resources.

2. Matching funds

Any matching funds that are deposited in a Demonstration Project IDA are excluded from income and resources.

3. Interest

  • Any interest earned on the individual's own contributions is unearned income when received, and becomes a countable resource in the month after the month of receipt.

  • Any interest earned on the matching funds that are deposited in a Demonstration Project IDA is excluded from income and resources.

4. Disbursements

Disbursements from a Demonstration Project IDA can only be made for a qualified purpose (e.g., education, business capitalization or first home purchase) or for an allowable emergency (as determined by the IDA agency). Disbursements from a Demonstration Project IDA for a qualified purpose are excluded from income. Emergency withdrawals are loans and therefore are not income, see SI 00815.350.

NOTE: The Demonstration Project IDA agency determines what constitutes a qualified purpose. Assume that all disbursements follow IDA rules.

E. Procedure – effective 01-01-01

1. How to verify demonstration project IDAs

In both initial claims and redeterminations, use documents in the individual's possession to verify that the account is a Demonstration Project IDA. If such documents are not available, contact the Demonstration Project agency to verify that the account is a Demonstration Project IDA.

2. Consolidated Claims Experience (CCE) input

  • On the Wages page, input the gross monthly earned income in the "Alleged Amount" or "Verified Amount" field, as appropriate. Input any amounts deposited into a Demonstration Project IDA in that month in the "Other Deduction Amount" field. Enter "Demonstration Project IDA" and the applicable months in the "Other Deduction Amount Reason " field.

  • Use the Interest page to input all interest received on the account each month. Input the total interest in the "Alleged Amount" or "Verified Amount" field and the "Other Deduction Amount" field. Enter "Demonstration Project IDA" and the applicable months in the "Other Deduction Amount Reason " field.

  • On the Resource Selection page, answer “yes” in the “Financial Institution Accounts” field.

  • On the Financial Institution Account page, identify the type of account and then complete the screen as normally. In the “Alleged Value” or “Verified Value” field, input the balance in the account. In the “Excluded Amount” field, also input the balance in the account. In the “Exclusion Reason” field, list “TANF IDA” or “AFIA IDA”.

3. Non-MSSICS input

  • Enter in the EN field on the SSA-1719-B, the SSI PE update screens, or the SSA-450-SI, the individual's gross wages minus any contributions to a Demonstration Project IDA in that month.

  • Do not input any matching funds or interest earned on the Demonstration Project IDA.

  • Enter "Demonstration Project IDA" and the applicable months in the SSR Remarks field.

4. Responding to inquiries about demonstration project IDAs

If an individual asks about the availability of Demonstration Project IDAs in their area, or about the IDA program's rules, check the listing of grantees at ACF's website at http://www.acf.hhs.gov/assetbuilding/states.html .

F. Procedure – prior to 01-01-01

1. How to verify demonstration project IDAs

In both initial claims and redeterminations, use documents in the individual's possession to verify that the account is a Demonstration Project IDA. If such documents are not available, contact the paying agency or the organization in charge of the Demonstration Project IDA.

2. CCE input

  • Input the gross wages (including any amounts the individual contributes to their IDA) on the Wages page.

  • Use the Interest page to input all interest received on the account each month in the “Gross Amount” field. In the “Other Deduction Amount” field, enter the amount of interest earned on the matching funds. Enter “Demonstration Project IDA” and the applicable months in the “Other Deduction Amount Reason ” field.

3. Non-MSSICS input

  • Enter in the EN field on the SSA-1719-B, the SSI PE update screens, or SSA-450-SI the individual's gross wages (including any contributions to a Demonstration Project IDA).

  • Enter in the UM field on the SSA-1719-B, the SSA-450-SI, or the SSI PE update screens, only the interest received on the individual's contributions.

  • Enter “Demonstration Project IDA” and the applicable months in the SSR Remarks field. If an individual receives interest from an IDA and another source in the same month, in the Remarks field, list separately the month, amount, and source for each type of interest received.

G. References

SI 01130.678 Individual Development Accounts (IDAs)--TANF-Funded IDAs

SI 01130.679 Individual Development Accounts (IDAs)--Demonstration Project

SI 00830.665 Individual Development Accounts (IDAs)--TANF-Funded

SI 00830.403 Temporary Assistance for Needy Families (TANF)

SI 01130.700 Identifying Excluded Funds That Have Been Commingled With Nonexcluded Funds

MS 08113.003 Resource Selection

MS 08113.017 Financial Institution Account

 

 


To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/0500830670
SI 00830.670 - Individual Development Accounts (IDAs) -- Demonstration Project - 09/17/2024
Batch run: 10/21/2024
Rev:09/17/2024