TN 86 (06-01)

Citations:

Social Security Act as amended, Section 404(h); Section 103 of P.L. 104-193

A. Background

1. What is an Individual Development Account (IDA)?

An IDA is a special bank account that helps an individual save for his/her education, the purchase of a first home, or to start a business. He/she uses earnings from his/her work to set up an approved bank account for an IDA.

2. How Does a TANF IDA Help an Individual's Money to Grow?

An individual contributes money from his/her earnings to an IDA. His/her contributions are matched with money from his/her State's Temporary Assistance for Needy Families (TANF) program. The matching money helps the individual reach his/her goal sooner.

3. Who is Eligible for a TANF IDA?

If an individual is working and receiving TANF payments, he/she may be eligible for a TANF IDA.

4. What is the Statutory Authority for TANF IDAs?

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 authorized States to use money from their TANF grant to carry out a program to fund IDAs.

5. Who Determines Whether an Individual is Eligible for a TANF IDA?

The agency that provides the TANF benefits decides who is eligible for a TANF IDA.

NOTE: SSA does not determine whether an individual is eligible for an IDA.

6. What Federal Agency Oversees the IDA Programs?

The Administration for Children and Families (ACF) oversees the TANF and Demonstration Project IDA programs. (Demonstration Project IDAs are explained in SI 00830.670.)

7. What Other Information is Available About TANF IDAs?

A spotlight on IDAs is in POMS http://www.socialsecurity.gov/ssi/spotlights/spot-individual-development.htm.

B. Definition of IDA Terminology

The following definitions are for your information only. IDA agencies and organizations will apply these definitions to individual cases and determine IDA eligibility. Note that SSA does not determine whether an individual is eligible for an IDA.

1. Qualified Entity

A qualified entity is:

• not-for-profit organization described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from taxation under section 501(a) of such code; or

• a State or local government agency or a tribal government acting in cooperation with a not-for-profit organization.

2. Qualified Purpose

A qualified purpose is one of the following:

• Postsecondary educational expenses

• Business capitalization;

• First home purchase.

3. Postsecondary Educational Expenses

Postsecondary educational expenses are:

• Tuition and fees required for the enrollment or attendance of a student at an eligible educational institution, and

• Fees, books, supplies and equipment required for courses of instruction at an eligible educational institution.

IMPORTANT: The charge for room and board, if any, is not a “fee” for purposes of this section. However, the charge for room and board can be an approvable expense under a PASS (SI 00870.025B.5.g.).

4. Eligible Educational Institution

An eligible educational institution is an institution described in section 481(a)(1) or section 1201(a) of the Higher Education Act of 1965 or an area vocational education school (as defined in subparagraph (C) or (D) of section 521(4) of the Carl D. Perkins Vocational and Applied Technology Education Act (20 U.S.C. 2471(4)) in any State.

5. Qualified Business Capitalization Expenses

Qualified business capitalization expenses are qualified expenditures for the capitalization of a qualified business pursuant to a qualified plan.

6. Qualified Expenditures

Qualified expenditures are expenditures included in a qualified plan, including capital, plant, equipment, working capital, and inventory expenses.

7. Qualified Business

A qualified business is any business that does not contravene any law or public policy.

8. Qualified Plan

A qualified plan is a business plan which:

• Is approved by a financial institution, a microenterprise development organization, or by a nonprofit loan fund having demonstrated fiduciary integrity, and

• Includes a description of the services or goods to be sold, or a marketing plan and projected financial statements, and

• May require the eligible individual to obtain the assistance of an experienced entrepreneurial advisor.

9. Qualified First-Time Homebuyer

A qualified first-time homebuyer is an individual participating in the project involved (and, if married, the individual's spouse) who has had no ownership interest in a principal residence during the 3-year period ending on the date of acquisition of the principal residence.

10. Date of Acquisition

The date of acquisition is the date on which a binding contract to acquire, construct, or reconstruct the principal residence is entered into.

11. Principal Residence

A principal residence is a principal residence that costs no more than the limits set by the IDA project.

12. Tribal Government

A tribal government is a tribal organization, as defined in section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b) or a Native Hawaiian organization, as defined in section 9212 of the Native Hawaiian Education Act (20 U.S.C. 7912).

C. Policy

1. Contributions

Any earnings an individual contributes to his/her TANF IDA are deducted from his/her wages in determining countable income.

2. Matching Funds

Any matching funds that are deposited in a TANF IDA are excluded from income.

3. Interest

Any interest earned on the individual's own contributions and on the matching funds that are deposited in a TANF IDA is excluded from income.

4. Disbursements

Disbursements from a TANF IDA can only be made for a qualified purpose (e.g., education, business capitalization or first home purchase) or for an allowable emergency (as determined by the IDA agency). Disbursements from a TANF IDA for a qualified purpose are excluded from income. Emergency withdrawals are loans and therefore are not income (SI 00815.350).

NOTE: The TANF IDA agency determines what constitutes a qualified purpose. Assume that all disbursements follow IDA rules.

D. Procedure

1. How to Verify TANF IDAs

In both initial claims and redeterminations, use documents in the individual's possession to verify that the account is a TANF IDA. If such documents are not available, contact the TANF agency to verify that the account is a TANF IDA.

2. MSSICS Input

• On the IWAG screen, input the gross monthly earned income in the “Alleged Amount” or “Verified Amount” field, as appropriate. Input any amounts deposited into a TANF IDA in that month in the “Amount Not Counted” field. Enter “TANF IDA” and the applicable months in the “Reason Not Counted” field.

• Use the IINT screen to input all interest received on the account each month. Input the total interest in the “Gross Amount” field and the “Amount Not Counted” field. Enter “TANF IDA” and the applicable months in the “Reason Not Counted” field.

• On the RMEN screen, answer “yes” in the “Financial Institution Accounts” field.

• On the RFIA screen, identify the type of account and then complete the screen as normally. In the “Alleged Value” or “Verified Value” field, input the balance in the account. In the “Excluded Amount” field, also input the balance in the account. In the “Exclusion Reason” field, list “TANF IDA” or “AFIA IDA”.

3. Non-MSSICS Input

• Enter in the EN field on the SSA-1719-B, the SSI PE update screens, or the SSA-450-SI, the individual's gross wages minus any contributions to a TANF IDA in that month.

• Do not input any matching funds or interest earned on the TANF IDA.

• Enter “TANF IDA” and the applicable months in the SSR Remarks field.

4. After TANF Eligibility Ends

The treatment of an IDA after an individual's TANF eligibility ends or after an individual moves from one State to another can vary from State to State. Follow regional instructions for State-specific rules regarding whether an account stops being an IDA after TANF eligibility ends or an interstate move occurs, and how to treat deposits and withdrawals after TANF eligibility ends or an interstate move occurs.

5. Responding to Inquiries About TANF IDAs

If an individual asks about the availability of TANF IDA's in his/her area, or about the IDA program's rules, use information in regional POMS instructions to determine whether TANF IDAs are available. If no regional instructions exist, refer him/her to the local TANF office.

E. References

Exclusion from resources of TANF-funded IDAs, SI 01130.678

Exclusion from resources of Demonstration Project IDAs, SI 01130.679

Exclusion from income of Demonstration Project IDAs, SI 00830.670

Temporary Assistance for Needy Families (TANF), SI 00830.403

Excluded funds commingled with other funds, SI 01130.700

RMEN, MSOM MSSICS 013.002

RFIA, MSOM MSSICS 013.007