Individual Development Accounts (IDAs)

Matching savings accounts help eligible families pursue qualifying purchases.

What are IDAs?

Individual Development Accounts are matching savings programs that help low-income and low-wealth families save for goals such as purchasing a home, post-secondary education and starting or expanding a small business. In addition, they can help families leave poverty permanently.

What are the benefits of IDAs?

If you are eligible, IDAs provide matched savings accounts. Depending upon state law and the rules specific to an IDA program, matching funds can range anywhere from dollar to dollar, or up to eight dollars for every dollar deposited by the IDA account holder. Typically, matching ranges from two to three dollars per every dollar deposited. In Michigan, per the Michigan IDA Partnership (MIDAP), the matching ratio is 3:1 for a home purchase and 2:1 for post-secondary education, job training or to start/expand a small business. There are usually defined periods associated with IDAs (for example: six to thirty six months) as well as maximum matching amounts. For Michigan-specific information, visit MIDAP.

Who offers IDAs?

Per the FDIC, IDAs are typically offered by non-profit organizations, state or local government, for-profit organizations, banks, credit unions and thrifts. IDAs are offered in partnership between sponsoring organizations and financial institutions and can be operated as single programs, regional collaboratives or on a statewide level.

What are IDA requirements?

Requirements can vary depending upon state laws, as well as the rules and requirements of the IDA sponsoring organization. Requirements may include:

  • Income eligibility
  • Net worth (i.e. could include household assets including a car, equity in a home, other savings, etc.)
  • Earnings (i.e. IDA programs may require all or a majority of income to come from a paycheck, versus public assistance programs
  • Credit history
  • Limitations on withdrawals (i.e. rules can vary per state, typically there is a prohibition period of one to three years before matched funds can be withdrawn and they have to be used for eligible purchases)
  • Financial education requirements (i.e. many IDA programs require financial education as well as goal specific education such as homebuyer education)

To see if IDAs are offered in your state, visit www.cfed.org. To learn more about IDAs in Michigan, visit the Michigan IDA Partnership.

In addition, Michigan State University Extension is offering the free program, “Top 50 Tips: Be a Money SMARTY!” on Tuesday, April 8. The program will begin at 6 p.m. and is a part of Money Smart Week. To sign up for this program or to find other programs in Michigan, just visit www.moneysmartweek.org. Money Smart Week events are open to the public and cover topics including kids and money, unemployment, managing student debt, retirement and more.  

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