Individual Development Accounts (IDAs)

Individual Development Accounts, also known as “IDAs,” are special savings accounts. You choose a goal to save for and use the IDA account to save money towards meeting that goal. IDA goals are usually buying a first home, education or training costs, or funding for a small business.

The money you put into the account will be matched by other sources. The match may be anywhere from one to four times the amount of the deposit you make. For example, if you’re enrolled in an IDA program with a 2:1 match and you deposit $50 into your account, the program will add an additional $100 towards your savings goal.

There are more than 250 IDA programs nationwide. Their eligibility requirements can be different. Generally, to qualify for an IDA:

• Your annual income must be within 200% of the Federal Poverty Level ($30,120), and
• You must have some form of earned income.

Once you’re enrolled in the program, you also need to take financial education classes.

To research and find an IDA program in California, check out the DB101 list of IDA resources and the Prosperity Now IDA directory.

Funding Sources

Funding for IDAs comes from a variety of places, including government agencies, private companies, non-profits, and individual people.

If you are getting Supplemental Security Income (SSI) benefits and plan to enroll in an IDA, it is very important that you find out the funding source for that IDA program:

• If you enroll in a nonfederally funded IDA (for example, one funded by a nonprofit or private company), money deposited and matched in your IDA may put your SSI benefits at risk.

• But if you enroll in an IDA program that is federally funded through Temporary Assistance for Needy Families (TANF) or the Assets for Independence Act (AFIA) block grants, money deposited won't be counted as a resource and a portion of it will be excluded from income for SSI.

If you are on SSI, it is highly recommended that you enroll in a TANF or AFIA funded IDA, rather than one funded by some other source, so that you don’t risk losing your benefits.

Program Eligibility

Each IDA program is different and eligibility requirements may vary from program to program. Most require that:

• Your annual income is within 200% of the Federal Poverty Level ($30,120 for an individual, $40,880 for a couple), and

• You have earned income.

For an AFIA- or TANF-funded IDA, you must have income from work. It doesn’t matter if you’re working full-time or part-time, but you must be earning income from some sort of job. IDAs that are funded by other sources may have slightly different earned income requirements and allow for income from other sources.

Citizenship Requirements

IDA programs funded by the federal government may check on your citizenship or legal residency status when you apply. IDA programs funded by other sources may or may not do this. Be sure to ask about specific citizenship requirements when looking at IDA programs.

Financial Literacy Training

Once you’re enrolled in an IDA program, you must take their free financial literacy training. Financial literacy programs improve your ability to manage your personal finances, save more money, and do financial planning.

This training usually covers topics like:

• Money
• Debt reduction
• Developing a savings plan
• Credit, and
• Investing.

IDA Savings Limit

Most IDA programs only let you save a limited amount of money in your account, usually $4,000 to $6,000. This includes the money you deposit, as well as the matching funds. Once you reach the limit, you won’t be allowed to deposit any more money into the account. IDA programs also have a limit on how long you can save, usually 2 or 3 years.

How to Apply

If you are interested in starting an IDA, contact an IDA program in your area, search the Prosperity Now IDA directory. Ask if the IDA program you are interested in is accepting applications. Some programs may have waiting lists. Even if they do, you may be able to start by taking financial literacy training while waiting for a space to open up. You can also look at the DB101 list of IDA resources. 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.

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.

Once you find an IDA program that fits your needs, you should go to an orientation meeting to learn more about it.

You will also need to provide information to prove your eligibility for the program. If you get into the program, you will have an IDA caseworker who will help with your account. You’ll open a savings account with a bank or credit union that is connected to your IDA program. Depending on the program, you may need to deposit a certain amount into your account each month.

Once you’ve reached your savings goal, you can take money out of the account to spend on your goal.

Integration with Other Benefits Programs

IDAs and Supplemental Security Income (SSI)

Because SSI has income and asset limits, working and saving money in an IDA account could risk your eligibility. Be sure to find out about the funding source before you enroll in a certain IDA:

• If you enroll in an IDA program that is federally funded via Temporary Assistance for Needy Families (TANF) or the Assets for Independence Act (AFIA), you don’t need to worry about losing your benefits. Money deposited won't be counted as a resource and a portion of it will be excluded from income for SSI.
• If you enroll in an IDA program that is funded by some other source, money deposited into your IDA may be counted as a resource and you could lose your SSI benefits.

If you are on SSI, you should enroll in an AFIA- or TANF-funded IDA.

IDAs and Plans to Achieve Self-Support (PASS)

A Plan to Achieve Self-Support (PASS) is an SSI program that lets you set aside money for a specified work goal, such as:

• Starting a new career
• Going back to school

The money you set aside in a PASS does not count against SSI's income and resource limits. This means you can save money towards a career goal in a PASS and continue to use SSI benefits for basics like food and rent.

An IDA can be a part of your PASS plan; the only requirement is that your goal for each program be the same. One of the benefits of using the two together is that it lets you to set up a non-federally funded IDA without risking your SSI benefits.

As long as the money you save in your IDA is part of a PASS plan, it will not be counted by SSI and won’t jeopardize those benefits.

IDAs and Social Security Disability Insurance (SSDI)

People on SSDI can enroll in any IDA program they choose. There are no restrictions.

One thing to consider though, especially if you’re using an IDA to fund a small business: As your earned income increases, and particularly as you start earning above Social Security's Substantial Gainful Activity (SGA) level ($1,550/month for individuals in 2024), SSDI’s work rules will apply and your SSDI benefit may be affected. For details on how working can affect your SSDI, read DB101’s section on SSDI and Work.

IDAs and the Earned Income Tax Credit (EITC)

The Earned Income Tax Credit (EITC) is a federal tax program that lowers the amount of income tax owed by low- to moderate-income workers and families. Money you get from an EITC can be put into an IDA and matched, helping you to reach your savings goal faster.