IDAs for Fathers and Families

What is an IDA?

Individual Development Accounts (IDAs) are matched savings accounts that can be used for a specific asset purchase. The match rate is the amount that the IDA program contributes for each dollar that a participant saves. This rate varies greatly across IDA programs and can range anywhere from $1 to $8 of match for every dollar saved. For example, if a program has a $4 match rate for every $1 dollar saved, each time a participant deposits $25 into an IDA account, an additional $100 in matching funds would be allocated for savings. When the accountholder is ready, both the savings and the match are used to purchase the asset. By leveraging saved dollars against matched dollars, individuals are able to grow their savings more quickly and be successful in purchasing an asset with long-term return potential.

IDAs provided by Assets for Independence grantees can be used to save toward first-time homeownership, starting a small business, or postsecondary education. For more information about AFI IDAs, see What are AFI IDAs and Who is Eligible to Participate? In addition, IDAs funded by States and private sources sometimes allow saving for assistive technology, vehicles, and other items. For more information about State-level policy regarding IDAs, see the Center for Social Development’s map of policies by State.

Participants who are eligible for their State’s Temporary Assistance for Needy Families (TANF) program are automatically eligible for IDAs provided by Assets for Independence grantees. Otherwise, potential participants must have household adjusted gross income less than or equal to 200 percent of the poverty line or be eligible for the Federal Earned Income Tax Credit (EITC). In addition, participant households cannot have more than $10,000 in net worth, not including the assets represented by up to one home and one automobile.  IDA projects funded by other sources may have different eligibility requirements.

How can custodial and noncustodial parents benefit from IDAs?

Both custodial and noncustodial parents may use IDAs to leverage their earned income and save for important assets that will contribute to their family’s long-term financial security. Money saved within an AFI-funded IDA does not count against the asset limits for TANF eligibility (though IDAs funded through other sources may affect eligibility), so participation in an AFI IDA project will not disqualify participants from accessing other Federal benefits.

A key eligibility requirement for IDA participants is that participants have some form of earned income: participants without any source of earned income cannot contribute to an IDA. It is important to note that most forms of Federal benefits do not count as earned income and cannot be deposited into an IDA (the EITC, and other refunds that are associated with earned income, are exceptions).

Because of the earned income requirement, any custodial or noncustodial parent who is unemployed may need to access other services before being able to enroll in an IDA. One Stop Career Centers provide assistance with resume development and job search. For more information about locating a One Stop Center, see the One Stop Service Locator.  Fatherhood programs offer economic stability programs that emphasize employment for low-income fathers, and often have partnerships with child support agencies. To find a fatherhood program near you, see the www.fatherhood.gov Web site.

How can child support and AFI grantees partner to provide IDA services?

Child support agencies can promote the availability of IDAs to low-income employed noncustodial and custodial parents.

To find an organization that offers AFI-funded IDAs, search for a program by State at this Web site: http://IDAResources.org/Map.