How IDAs Work

Once you’ve decided to do an Individual Development Account (IDA), you must take several steps to enroll in an IDA program:

  1. Decide how much money you plan to save up and what you are going to do with it. You could use the money for something that will help you with your education, with your small business, or with buying a home.
  2. Locate an IDA 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. Find out as much as you can about the IDA program you are considering.
    • What is the source of the program’s funding? Is it federally funded?
      • If the IDA program is federally funded, money deposited in that account and the match money will not be counted by Supplemental Security Income (SSI) or Medical Assistance (MA). That means it will not impact your benefits. The importance of this is explained in detail here.
      • If you enroll in an IDA that is not funded by the federal government (one funded by a nonprofit or private company, for example), money deposited and matched in your IDA may jeopardize your SSI and MA benefits.
    • Does the program fund the goal you decided upon in the first step?
      • Federally funded programs only allow you to save for small-business development, higher education expenses, and the purchase of a first home.
      • Some privately funded IDAs may allow you to save for other goals, like buying a new computer or car.
  4. Once you have found an IDA program that is suitable for you, attend an orientation meeting to learn more about it.
  5. If you decide to enroll, supply the required personal and financial information to verify your eligibility for the program.

Once you have enrolled and been accepted into the IDA program, you will be assigned an IDA caseworker who will help you with your account. You’ll open a savings account with a bank or credit union that is tied to your IDA program. Depending on the program, you may need to deposit a certain amount of money into your account each month.

What if I change my mind?

Some IDA programs allow you to change your savings goal once. So before you set up your account, you should ask your IDA caseworker if you can change your savings goal later on. And notify your caseworker as soon as you think your goal may be changing. Keeping everyone informed is very important!

In most programs, there is a minimum amount of time that you must be enrolled before the matching funds start to accumulate: 6 months for a business or educational goal, 10 months if you want to buy a home. Once you have fulfilled the minimum requirements, you’ve saved the agreed-upon amount every month for 6 or 10 months, and you’ve taken the financial literacy workshops, you can start to spend your money. At that point, the IDA program will calculate your matched amount and make a payment to your goal. Some IDAs don’t put money directly into your savings account. This is to avoid any illegal or dishonest behavior. The matching amount will not be available until you have met all requirements, are in good standing, and are ready to make your purchase.

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

Failing to fulfill IDA requirements

If you enroll in an IDA program, but do not fulfill its requirements, you may become ineligible to access the matching funds offered by the program. Be sure to review the requirements of your program carefully with your IDA caseworker.