Expanding Savings Options for Persons with Disabilities through the Establishment of Individual Development AccountsBy: Sara Sack, Ph.D.Assistive Technology for Kansans(316) 421-8367
IDAs and WELFARE REFORM Individual Development Accounts (IDAs) are optional, dedicated savings accounts that provide incentives for asset-building investments (Flacke, Grossman, and Jennings, 1999).
IDAs are matched savings and investment accounts for people who have low-incomes.IDAs have been used to help individuals save for high return investments in education, job training, homownership, and microenterpirse.
The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) authorizes states to create community-based IDA programs with TANF block grant funds. • IDAs are managed by community organizations and accounts are held at local financial institutions.
Contributions from lower income participants are matched using both private and public sources. • Money set aside in IDAs is disregarded in determining individual assets.
STATE IDA INITIATIVES • June, 2000: CO, CN, VT recently passed IDA legislation (May-June). VA began implementing a state-supported program. CN and VT received appropriations from SGF for match and administration. VA approved TANF MOE funds for IDAs, and CO, CT, and HA approved IDA tax credits for match contributors. MD’s legislation did not pass but gained support.
32 states include IDAs in plans for using TANF funds • 29 states have passed IDA legislation for TANF recipients and/or low-income citizens • 7 states have created pilot programs for IDAs by administrative rule
NJ and NY have pending IDA legislation. FL, MD, and DC will re-introduce IDA legislation in the upcoming legislative session. • Currently over 350 community-based IDA programs exist • And, non-profit organizations in at least 47 states are implementing or planning IDA programs, with or without state support.
MULITPLE APPROACHES BEING USED • Refundable individual tax credit, tax exemption of deposits in IDA, and tax exemption for withdrawals • Tax credit to contributors • Direct match from state, required match from employer who receives wage subsidies, voluntary employer match
KANSAS APPROACH • Introduce legislation to add purchase of assistive technology as protected savings goal
Flacke, T., Grossman, B., & Jennings, S. “Individual Development Account Program Design Handbook: A Step-by-Step Guide to Designing an IDA Program,” (1999). Corporation for Enterprise Development, 777North Capitol Street, NE, Suite 410, Washington, D.C. 20002, (202) 408-9788/Sherraden,M., Page-Adams, D., Johnson, L. (1999). Downpayments on the American Dream Policy Demonstration: A National Demonstration of Individual Development Accounts, Start-up Evaluation Report. St. Louis, MO: Center for Social Development at Washington University.www.gwbweb.wustl.edu/csd/idawww.welfareinfo.org/individu.htm REFERENCES