An individual development account (IDA) is a savings account geared towards low-income individuals to assist in building assets to achieve financial stability and long-term self-sufficiency. An IDA is used for a predefined purpose, such as paying for education, purchasing a home or starting a business. Account savings are matched by private or public funds.
The program provides economic literacy training that shows participants how to repair credit, set up a budgeting and savings schedule, and teaches the basics of money management. Sponsors may also provide volunteer income tax assistance (VITA), one-on-one financial counseling or other services.
Additionally, some individual development account programs allow participants to save money for other purposes such as saving for …show more content…
Participants must receive TANF payments and either be working or meet certain income requirements to open an IDA. Participants must meet additional criteria such as credit and total assets.
<>Effects on Benefits<>
TANF funds can be deposited into an IDA account and do not affect eligibility for federal social service programs. An individual’s contributions, matching contributions, and interest earned are not considered an asset when determining eligibility or benefits for federal programs such as Electronic Benefit Transfer, Medicaid, Social Security and federal housing assistance programs. Therefore, benefits do not decrease. However, SSI payments may decrease for workers without an individual development account because the money earned is counted as income and is used to determine SSI eligibility and benefits.
<>How IDAs Benefit Banks<>
IDA programs allow financial institutions to expand into underbanked and unbanked markets. After reaching their savings goals, program participants typically exhibit loyalty to financial institutions by purchasing other products and services such as obtaining
The program provides economic literacy training that shows participants how to repair credit, set up a budgeting and savings schedule, and teaches the basics of money management. Sponsors may also provide volunteer income tax assistance (VITA), one-on-one financial counseling or other services.
Additionally, some individual development account programs allow participants to save money for other purposes such as saving for …show more content…
Participants must receive TANF payments and either be working or meet certain income requirements to open an IDA. Participants must meet additional criteria such as credit and total assets.
<>Effects on Benefits<>
TANF funds can be deposited into an IDA account and do not affect eligibility for federal social service programs. An individual’s contributions, matching contributions, and interest earned are not considered an asset when determining eligibility or benefits for federal programs such as Electronic Benefit Transfer, Medicaid, Social Security and federal housing assistance programs. Therefore, benefits do not decrease. However, SSI payments may decrease for workers without an individual development account because the money earned is counted as income and is used to determine SSI eligibility and benefits.
<>How IDAs Benefit Banks<>
IDA programs allow financial institutions to expand into underbanked and unbanked markets. After reaching their savings goals, program participants typically exhibit loyalty to financial institutions by purchasing other products and services such as obtaining