Connecticut Individual Development
Account Initiative (IDA)
Frequently Asked Questions
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1. What is an IDA?
An IDA, or Individual Development Account, is
a special matched savings account designed to help families and individuals
of modest means establish a pattern of regular saving and, ultimately,
purchase a "qualifying asset".
A "qualifying asset" is something of value that is likely to return
substantial long-term benefits to its owner, benefits like security,
stability and opportunities for more income.
Participants may use their savings and match money toward one of several
assets, which depending on the program -- might include a first home, a
small business, a post-secondary education, a vehicle if needed to get or
keep a job, or a deposit on an apartment, or post-secondary
education for a dependent child.
2. What is a "savings match"?
A "savings match" is a commitment to match an IDA
participant's savings deposits at a specific rate. The savings in
your IDA can be matched $2.00 for every $1.00 that you save, up to a
maximum match of $3,000.
3. Who is eligible to participate?
IDA Programs are designed to help low-income
working families build assets. There is an income
eligibility limit for entrance into the program. Income eligibility
is determined once, upon entrance into the Program; there is no
subsequent re-determination of income eligibility. The eligibility criteria differ with each
program, but there is usually an income eligibility limit as well as an
asset limit for entrance into the program. There are also other things that
the program operator will consider when determining your eligibility for the
program like your ability to attend meetings and your willingness to save.
IDA Program staff will meet with you to determine if you meet income
eligibility and other eligibility requirements.
4. What is required of IDA participants?
IDA participants must commit to:
Make regular savings deposits (the amounts are determined on an individual basis).
Attend a Financial Education Course.
Participate in monthly Asset Specific Savings Clubs.
Work with a Case Manager on an on-going basis.
5. Why would anyone give away money like that?
IDA savings matches are not "giveaways."
Participants earn matches by saving their own hard-earned dollars and taking
other steps to prepare for the future, like attending Financial Education
classes. Furthermore, providing match dollars is a way to help hard-working
low-income families and individuals build a more stable and secure future.
Everyone benefits when more members of a community have the tools they need
-- to provide for themselves and their families. This same thinking has been
behind government initiatives like the Homestead Act of the 19th century and
the G.I. Bill following World War II.
6. Is there more to an IDA Program than just saving matches?
Absolutely! Most people need more than just
cash to become successful homeowners, entrepreneurs or college or vocational
school students. For this reason, participants in the IDA program attend
both Financial Education classes and a special on-going asset preparation
program. These workshops are designed to help participants acquire or polish
the personal and financial skills that are essential for long-term success;
such as skills for long-range planning, household budgeting, credit repair
and savvy consumer habits. Participants learn important
information that will help them make a wise asset purchase and
also protect their asset in the future.
7. Where are savings deposited?
Your Case Manager will tell you in
which Bank you will open your IDA Account.
IDAs will not be assessed any
monthly service fees and will be insured by the FDIC for up to $100,000 per account.
8. What about making savings withdrawals?
Because IDAs are intended to help
people purchase assets, withdrawals for non-asset uses are strongly
discouraged. However, some programs allow program participants to withdraw
some of their savings for certain emergency situations before they are ready
to purchase their chosen asset goal. Such withdrawals would not include
savings matches. A participant has to work with their Case Manager to
develop a plan to replace the funds withdrawn from their IDA. Of course,
participants are always free to close their accounts, withdraw from the
program and receive all of their savings and earned interest.
9. How do participants receive match funds?
Matching funds will be made available
to participants when they are ready to purchase an asset. At that time, a
check will be issued directly to the company, institution, or individual
furnishing a participant's asset goal (a bank or mortgage company, wholesale
supplies or community college, for example). When a
participant is saving for post-secondary education for a
dependent child, at the time of asset purchase the
participant will open a 529 Savings Plan and the IDA savings
and matching funds will be deposited in it.
10. What if I am unable to complete the Program?
A Participant might decide to withdraw
from the Program for several reasons. If a Participant is not able to
continue saving or is having difficulties meeting the other requirements of
the Program, the Case Manager will help the Participant identify resources
or other ways to continue to meet their Program obligations. If, after
counseling, the Participant decides to withdraw from the Program, the
Participant will be given the money in their IDA and any interest earned.
They will not receive any matching funds.
200 Folly Brook Boulevard, Wethersfield, CT 06109 / Phone: 860-263-6000
State of Connecticut