Individual
Development Accounts (IDAs)
Individual
Development Accounts (IDAs) are emerging as one of the most promising
tools that enable low-income and low-wealth American families to save,
build assets, and enter the financial mainstream. IDAs are based on
the idea that all Americans should have access to the institutional
structures that subsidize wealthier families. The Homestead Act, GI
Bill, IRAs, 401(k)s, and the home-mortgage interest deduction are good
examples of how government has helped millions of American families
acquire assets and achieve economic independence. By expanding IDAs,
government can also help America's working-poor families save, acquire
assets, and participate more fully in the economy.
IDAs encourage
savings efforts among the poor by offering them 1:1, 2:1, or more generous
matches for their own deposits. IDAs reward the monthly savings of working-poor
families who are trying to buy their first home, pay for post-secondary
education, or start a small business. These matched savings accounts
are similar to 401(k) plans and other matched savings accounts but can
serve a broad range of purposes.
It is estimated that over 500 IDA initiatives exist in communities across
the US, and at least 10,000 people currently hold an IDA account. Some
form of IDA legislation has been passed in 35 states, as well as in
Washington, D.C. and Puerto Rico, and 30 states have included IDAs in
their state Temporary Assistance for Needy Families (TANF) plans. Legislation
supporting IDA programs nationwide has also been passed at the federal
level in the Assets for Independence Act (AFIA) of 1998.
Learn more
about IDAs here.
