IDA Program Overview

What are IDAs?

Individual Development Accounts (IDAs) are emerging as one of the most promising tools that enable low-wealth American families to save, build assets, and enter the financial mainstream. Based on the idea that all Americans should have access, through the tax code or through direct expenditures, to the structures that subsidize homeownership and retirement savings of wealthier families, IDAs encourage savings efforts among the poor by offering them 1:1, 2:1, or more generous matches for their own deposits. IDAs reward the monthly savings of working-poor families who are trying to buy their first home, pay for post-secondary education, or start a small business. These matched savings accounts are similar to 401(k) plans and other matched savings accounts but can serve a broad range of purposes.

IDA programs are implemented by community-based organizations in partnership with a financial institution that holds the deposits, and funded by public and private sources. Similar to 401(k)s, IDAs make it easier for low-income families to build the financial assets they need to achieve the American dream.

What's Happening with IDAs Nationwide?

Over 500 IDA initiatives exist in communities across the country. Overall, at least 10,000 people are currently saving in IDAs.

  • 30 states included IDAs in their state Temporary Assistance for Needy Families (TANF) plans (as allowed by the 1996 welfare reform law), which excludes counting IDAs as assets for the purpose of qualifying for benefits.
  • 34 states, Washington, D.C., and Puerto Rico have passed some form of IDA legislation. Only six states have no known IDA activity.
  • Several national foundations have supported the American Dream Demonstration (ADD), a 4-year, 14-site IDA policy demonstration.
  • IDAs are expected to reach an additional 30,000 to 40,000 working-poor Americans by the year 2003 though the federal Assets for Independence Act of 1998 (AFIA).
  • The Savings for Workings Family Act of 2002 (SWFA), introduced in both the U.S. Senate and U.S. House of Representatives, proposed billions in tax credits for financial institutions and private sector investors to match and support IDAs. Although SWFA did not pass in 2002, it may be reintroduced during the 2003 session.
  • The Office of Refugee Resettlement has also established an IDA program for organizations across the country assisting refugee populations.