| Description: |
The
Individual Development Account (IDA) Program empowers low-income
families to build long-term productive assets through matched
savings accounts. The participant’s accumulated funds
may be used to purchase a home, or start a business, or to continue
higher education or vocational training. |
| Assistance
Provided To: |
The
Individual Development Account (IDA) Program is administered
by local community based organizations, which are selected to
receive individual grants from the New Jersey Department of
Community Affairs. |
| Counties: |
Bergen, Camden, Cumberland, Essex, Gloucester,
Hunterdon, Morris, Mercer, Middlesex, Salem, Sussex, Union and
Warren.
|
| Contact: |
Paulette
O'Neal - (609) 633-6272
po'neal@dca.state.nj.us
|
How
are savings matched?
Where
are savings deposited?
Who
is eligible to participate in the program?
What
is required for participation in the program?
How
long can a participant save?
What
about emergency withdrawals?
What
if a participant is unable to complete the Program?
What
are some qualified asset purchases?
How
does a participant receive match funds to purchase an asset?
Q. How are savings matched?
The IDA Program
will match a program participant at a match rate of 1:1 for every
dollar saved from earned income. The maximum match per year is
$1500. The total savings that can be matched is $4500. The money
earned through the IDA account is not a loan, and does not have
to be repaid.
Q. Where are the savings deposited?
Savings are
deposited in an IDA reserve account in trust for participants
in a designated financial institution. State law requires that
an IDA be established as a custodial account. The account is a
joint account between the program participant and the non-profit
agency.
Q.
Who is eligible to participate in the program?
Participation
in the program is limited to families living in New Jersey who
have one or more dependent children. Families must have earned
income at or below 250% of the federal poverty level at the time
of their enrollment in the program. A minimum 33.3% of participants
must be former Work First New Jersey,
Aid to Families with Dependent Children (AFDC), or Temporary Assistance
for Needy Families recipients.
Annual Income Guidelines as Published in the Federal Register
on January 23, 2008
| Family
Size |
Income
Level at or below |
| 1 |
$26,000 |
| 2 |
$35,000 |
| 3 |
$44,000 |
| 4 |
$53,000 |
| 5 |
$62,000 |
| 6 |
$71,000 |
| 7 |
$80,000 |
| 8 |
$89,000 |
Q.
What is required for participation in the program?
Participants
must attend to 18 hours of Financial Education classes prior to
opening an account. Financial education includes:
- Psychology
of Spending
- Basic
Money Management and Budgeting
- Credit
- Savings
Strategies
- Saving
and Investing on a Shoestring
- Predatory
Lending Practices
Participants
must also attend approximately 10 hours of training with the focus
on their asset choice of home ownership, business ownership or
education.
Q. How long can a participant save?
Participants
save between 6 to 36 months. Participants must deposit a minimum
amount into their savings account each month in order to remain
in the IDA program and receive the match. Ongoing case management
will be provided throughout the length of the IDA Program.
Q.
What about making emergency withdrawals?
Program participants
may withdraw some of their savings for certain emergency situations
before they are ready to purchase their asset goal. Emergency
withdrawals are clearly outlined in the Program Policy and Procedures
Manual. Such withdrawals do not include the match savings. A participant
must work with their Case Manager to develop a plan to replace
the funds withdrawn from their IDA account. If a participant makes
an unauthorized withdrawal from their IDA, they must withdraw
from the program and forfeit the match.
Q.
What if a participant is unable to complete the Program?
A participant
is always free to withdraw from the program, close their account
and receive all of their savings and earned interest. However,
matching funds are forfeited if the account is closed prior to
completion of the program.
Q. What are some qualified asset purchases?
| Asset
Purchase |
Examples
of Qualified Expenses |
| Home
Purchase |
Acquisition
costs, appraisal fees, attorney fees, closing costs, title
insurance, and other customary expenses. |
| Business |
Start
up inventory, supplies or equipment, marketing materials,
licensing fees and other materials included in an approved
business plan. |
| Education |
Tuition,
registration fees, books, lab fees, supplies or equipment
directly related to coursework. |
Q.
How does a participant receive match funds to purchase an asset?
Savings are
matched by public funds and are paid directly toward the purchase
of the asset. Checks are issued payable to the vendor providing
all or a part of the asset goal.
