Eligibility

An Individual Development Account (IDA) is a savings account for low-income workers that can be used to fund a small-business development, get a higher education, or buy a first home.

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.

Each IDA program is unique and has slightly different eligibility requirements and operating procedures. One of the biggest benefits of setting up an IDA account is the matching funding that is offered under the program; IDA programs match your total savings when you reach your agreed-upon savings goal. In general, for every dollar you deposit into your account, your IDA program will match you with somewhere between $1 and $4, depending on the program.

For example, if you have an IDA with a 3:1 match and you deposit $25, your IDA program would contribute an additional $75 towards your savings goal. You would have a total of $100! This makes the program a very effective way to save for a specific goal.

Program Eligibility

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 ($30,120 for an individual, $40,880 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 you to have 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:

• Asset limits
• Based on your credit history
• Based on whether or not you are a citizen or legal resident

IDA Savings Limit

Most IDA programs only allow you to have a certain amount of money be matched by your IDA account — usually around $4,000. The exact amount you can save will depend on the program you are using. You can deposit more money into your savings account, but only the goal amount will be matched.

How to Apply for an IDA

You can find good IDA program directories at the Prosperity Now and the Assets for Independence Resource Center. You can also contact A New Leaf.

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.