Individual Development Accounts (IDAs)

Frequently Asked Questions

An Individual Development Account, also known as an “IDA," is a savings account for low-income workers that can be used for small-business development, higher education, or the purchase of a first home. Each time you make a deposit, the IDA program contributes an additional deposit called a “match.” Most IDA programs have a match that is 1 to 4 times the size of your deposit. For example, if you are in an IDA program with a 2:1 match, each time you deposit $25, your program sets aside an additional $50.

Each IDA program is different and eligibility requirements vary from program to program. Generally, most have the following requirements:

  • Your annual income must be 200% of the Federal Poverty Guidelines ($27,180 for an individual and $36,620 for a couple) or less.
    • Exception: In some cases, you may qualify if your income is 65-85% of the median income in your area. (The median is the number that separates something, such as an age group, into 2 equal halves. For example, if the median age for a group of people is 30, then half of the group is younger than 30 and the other half is older than 30. The median amount is not the same as the mean, or average.)
  • You must have earned income from a job.
    • Exception: Some IDAs that are not funded by the federal government may have slightly different earned income requirements and allow for income from other sources.
  • You must attend free financial literacy training. These classes usually cover topics such as money management, debt reduction, developing a savings plan, credit, and investing.

Some programs also have additional restrictions based on:

You must have earned income to enroll in an IDA. However, if you lose your job after enrolling, most IDAs will allow you a 6-month grace period. As long as you find a new job within 6 months, you’ll likely be able to keep your IDA.

Most people keep their IDAs open for 1 to 3 years, but some programs allow you to keep your account up to 5 years.

Federally funded IDAs can be used for 3 purposes:

  • Developing a business
  • Investing in higher education, or
  • Purchasing a first home.

IDA programs that are funded by other sources may allow you to save for other purposes like buying a car or computer. Check with the specific IDA program you wish to participate in for more details.

Once accepted into an IDA program, you will be required to take financial education training. This training will give information on how to:

  • Reduce your debt
  • Develop a savings plan
  • Prepare for your savings goal
  • Research your credit history
  • Choose banking options
  • Invest
  • Manage money

You may also take workshops related to your savings goal. Training may be in the form of one-on-one counseling, classroom training, peer support, or online training.

Once you’ve decided to participate in an IDA, you must take several steps:

  1. Figure out whether or not you want to pursue an IDA and what your goal is.
  2. Locate a program in your area. There are good IDA program directories at Prosperity Now and the Assets for Independence Resource Center.
  3. Attend an orientation meeting to find out about the program and verify your eligibility.
  4. Once accepted into the program, open a savings account at a bank or credit union that is tied to the IDA organization.
  5. Regularly deposit money into the account.
  6. When you have reached your savings goal, start withdrawing money from the account to spend on your goal.

No. Disability status is not required to participate in an IDA program

There are IDA program directories at Prosperity Now and the Assets for Independence Resource Center. Note: There aren't as many IDA programs as there used to be. Some are still active, but it can take a bit of effort to find one that is accepting applications.

Yes, AHCCCS has no asset limits, so you can participate in an IDA while enrolled without endangering your benefits. However, if you are an Arizona Long Term Care System (ALTCS) participant, then you should make sure to enroll in a federally funded IDA program. If you enroll in an IDA program that is funded by some other source, you could lose your SSI or ALTCS eligibility because of their asset limits.

Yes. An IDA can be a part of your PASS; the only requirement is that your goal be the same for each program. One of the benefits of using the two together is that it allows you to set up a nonfederally funded IDA without jeopardizing your SSI or ALTCS benefits. As long as the money you save in your IDA is part of a PASS plan, it will not be counted by SSI or ALTCS for eligibility and you won’t lose those benefits.

Yes. You should ask your IDA caseworker to write a letter stating that you can participate in the IDA program without losing your SSI benefits. The letter should specifically mention the “Exclusions under Other Federal Statutes” clause. You should take the letter to Social Security for documentation and keep a copy of the letter for yourself.

Yes. There is no asset limit for SSDI recipients, so your IDA savings program will not impact your SSDI benefits. Therefore, SSDI beneficiaries can use either federal or nonfederal IDA without affecting their SSDI benefits.

Each IDA program has different requirements for staying in the program. Generally, participants must attend an orientation, complete financial education training, keep in contact with their caseworkers, and complete their savings goals. As long as you do these and follow your savings plan, you should stay enrolled.

Yes. Most IDA programs only allow you to save a certain amount of money in your account — usually around $4,000. This includes the money you deposit as well as the matching funds. Once you reach the limit, you can deposit more money, but only the goal amount will be matched.

Contact an IDA program in your area to find out if they are currently accepting applications. There are good IDA program directories at Prosperity Now and the Assets for Independence Resource Center.

Some programs may have waiting lists. Even so, you may be able to begin the process by taking financial literacy training while waiting for a space to open up.

Note: There aren't as many IDA programs as there used to be. Some are still active, but it can take a bit of effort to find one that is accepting applications.

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