What is an Individual Development Account (IDA)?

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 sets aside money that will be used for your designated purpose when you reach your savings goal. The money the IDA program sets aside is called a match. Most IDA programs have a match that is between 1 – 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.

Who is eligible for an Individual Development Account (IDA)?

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 ($24,980 for a single person and $33,820 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.
  • 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:

What if I lose my job while enrolled in an Individual Development Account (IDA)?

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.

How long can I keep my Individual Development Account (IDA) open?

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

For what purposes can I use an Individual Development Account (IDA)?

Federally funded IDAs can be used for 3 purposes:

  • Developing a business
  • Investing in higher education
  • Buying 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.

What will I be required to do once I’ve been accepted into an Individual Development Account (IDA) program?

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.

What is the process for participating in an Individual Development Account (IDA) program?

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

  1. Figure out what your goal is.
  2. Locate a program in your area. There are good IDA program directories at the Family Assets for Independence in Minnesota (FAIM) program, 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.

Are there any medical eligibility requirements to enroll in an Individual Development Account (IDA)?

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

How do I locate an Individual Development Account (IDA) program?

There are good IDA program directories at the Family Assets for Independence in Minnesota (FAIM) program, Prosperity Now, and the Assets for Independence Resource Center.

Can I qualify for an Individual Development Account (IDA) while getting Supplemental Security Income (SSI) or Medical Assistance (MA) benefits?

If you get Supplemental Security Income (SSI) or Medical Assistance (MA), 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 MA eligibility because of their asset limits.

Note: Not all people who get MA have asset limits for their MA coverage. People who get MA based on having a disability do have an asset limit. However, some people with disabilities get MA coverage due to having income below 138% of the Federal Poverty Guidelines (FPG), and people who get MA for this reason do not have an asset limit. If you are not sure whether there is an asset limit for your MA coverage, Chat with a Hub expert.

Can I participate in a Plan to Achieve Self-Support (PASS) and an Individual Development Account (IDA) at the same time?

Yes. An IDA can be a part of your PASS. To do so, your goal must be the same for both programs. One of the benefits of using the programs together is that it allows you to set up a nonfederally funded IDA without jeopardizing your Supplemental Security Income (SSI) or Medical Assistance (MA) 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 MA for eligibility and you won’t lose those benefits.

If I’m getting Supplemental Security Income (SSI), do I need to tell Social Security about my Individual Development Account (IDA)?

Yes. You should ask your IDA caseworker to write a letter stating that you are participating in the IDA program. 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.

Can I do an Individual Development Account (IDA) program at the same time as I get Social Security Disability Insurance (SSDI)?

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

How do I stay enrolled in an Individual Development Account (IDA) program?

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.

Is there a limit to how much I can save in my Individual Development Account (IDA)?

Yes. Most IDA programs only allow you to save a certain amount of money in your account — usually around $1,000. Once you reach the limit, you can deposit more money, but only the goal amount will be matched.