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Department
of Human Services Families
First Online Policy Manual Individual Development Account |
Revised: |
18.1 |
POLICY STATEMENT |
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An Individual Development Account (IDA) is
a special restricted savings account that a Families First participant can
set up to assist in purchasing four different assets. IDAs can be set up with the assistance of
the Tennessee Network for Community Economic Development (TNCED), an IDA
non-profit sponsor, and a local bank. TNCED is the statewide, non-profit
organization that operates the accounts for the IDA Project. An IDA is different from a regular savings account because funds
deposited by a participant are matched by a separate entity and there are
restrictions on the use of these funds.
An IDA will provide an opportunity for a participant to build assets
to further support the transition to self-sufficiency. The funds in an IDA (savings + match + interest), up to $5,000, will
not be considered as a resource for Families First participants when
computing the resource limit for initial or continued eligibility in the
Families First, Medicaid, and Food Stamp programs, as long as the participant
complies with IDA eligibility rules below.
The amount of an IDA that is over $5,000 is counted toward the $2,000
resource limit. The IDA can be used only for one or more of the following qualified
purposes, as determined and verified by TNCED or the sponsoring PIC: ·
Post-secondary
education for the participant or the participant’s children for career
development: Payments for tuition,
fees, books, supplies and equipment that are required for attendance and
instruction courses at a post-secondary educational institution are permissible. ·
Small
business development: Amounts paid directly from an IDA to a financial
account for the operation of the individual’s business are restricted for use
solely on qualified business expenses.
These expenses are those specified in an approved business plan
including: capital, plant, equipment, working capital and inventory expenses. ·
Home
ownership: Funds can be spent on a principal residence for a qualified
first-time homebuyer. This means a taxpayer (and, if married, the taxpayer’s
spouse) who has no ownership interest in a principal residence during the
three-year period ending on the date of acquisition of the principal
residence. The acquisition costs of
this residence cannot exceed 100% of the average area purchase price
applicable to such residence.
Qualified acquisition costs are the costs of acquiring, constructing
or reconstructing a residence. This includes any usual or reasonable
settlement, financing or other closing costs. ·
Transportation
Needs: Permissible purchases for transportation needs are the purchase of a
vehicle, necessary car repairs and the purchase of alternative transportation
vehicles (e.g. bicycle) to be used for employment or education purposes. If the Saver purchases a vehicle, the value
of the new vehicle will then be looked at according to Families First
resource policy. No funds from IDA can be withdrawn for purpose other than those listed
above, without penalty. The DHS
penalty is that any withdrawal of funds by an IDA group member for
unqualified purposes will cause the withdrawn funds to be considered a
resource in determining eligibility for Families First. The resource consideration will be for the
month of withdrawal and any subsequent months during which the funds may be
available to the individual. If the
individual is no longer a member of the IDA group, then all funds in the
savings account are counted as a resource.
The Saver will have the option to retain access to the match dollars
(if they are used for qualified purposes) for up to two years. If the Saver takes this option, these match
dollars will also be counted as a resource. Qualified withdrawals will not affect an individual’s resources or
eligibility unless the withdrawal is for the purchase of a vehicle. The value of a vehicle purchased with IDA
funds is considered when determining continued eligibility according to
Families First and Food Stamp vehicle resource policy. If the purchase is deemed unqualified by TNCED or the sponsoring PIC,
resulting in the denial of the withdrawal request, the IDA participant may
appeal in writing to the sponsoring agency’s staff member and TNCED’s
executive director or the PIC director
(whichever is applicable). The staff
member and the director will review the appeal to determine if the purchase
falls under any of the qualified purposes that are described above. If the purchase is still deemed
unqualified, the individual may file an appeal with the Department of Human
Services by following usual appeal procedures. The IDA contact is responsible for
completing an appeal summary and forwarding the Appeal for Fair Hearing to
Hearings and Appeals in the usual manner.
Appeals regarding eligibility or benefit level will follow usual
appeal procedures. When a family stops receiving Families First cash grants, funds in the
IDA account (savings + match + interest), and up to $5,000 are not counted as a resource when
determining eligibility for the Medicaid and Food Stamp programs. |
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