Individual Development Accounts: Cash for Savings

An individual development account (IDA) is a special matched savings account to help low-income people put money aside for homeownership, education, or a small business. For every dollar you deposit in your IDA account, the IDA program puts in one or more matching dollars. Your savings double or triple (or even more) with the matching IDA deposits. The amount of matching money you get depends on your IDA's match rate. Many IDAs have a 3 to 1 match, but some are higher and some are lower. If your IDA program offers a 3 to1 savings match, you get three extra dollars for each dollar you save. If you deposit $50 per month, for example, you get another $150 deposited in your account, for a total of $200. There is a limit on the amount of deposits that will be matched.

Not all IDA programs are the same. IDAs vary in the match rate they offer, the length of the program, the amount of savings that can be matched, and the way the money can be used. Massachusetts IDAs can be used to buy a house, pay for education, or start a small business.

Most IDAs require that you stay with the program for a certain amount of time in order to get the match. An IDA program can last one year or as long as five years. If you take out your money before the end of the program, you may lose the matching funds. Your IDA program will help you set up a savings goal and deposit schedule.

Eligibility

IDA programs vary in their requirements. Generally, to be eligible:

*Preference is given to Massachusetts residents living in state subsidized housing who earn up to 80% of area median income, as defined by the US Department of Housing and Urban Development. 

2009 Federal Public Housing Income Limits
 (80% of area median household incomes)

Number in Household

Boston
80% AMI

Worcester
80% AMI

Springfield
80% AMI

1

$46,300

$44,650

$43,450

2

$52,950

$51,000

$49,700

3

$59,550

$57,400

$55,900

4

$66,150

$63,750

$62,100

5

$71,450

$68,850

$67,050

6

$76,750

$73,950

$72,050

7

$82,050

$79,050

$77,000

8

$87,350

$84,150

$81,950

For median incomes in other Massachusetts communities, see the HUD 2009 Median Family Incomes ( PDF). “Low-Income” on the income chart equals 80% of the median.

Benefits

Benefits vary depending on the IDA program. All IDA programs match savings, but the match rates differ from one program to another. Most programs offer a 2-to-1 or a 3-to-1 match.

In addition, IDA programs usually offer one or more of the following:

To Apply

To apply for an IDA program, you should contact your local IDA sponsor. For programs in Massachusetts, see:

-Thanks to Maranda Ransdell for passing on this resource she received from a patient. Article adapted from: massresources.org, with additional information from the Mass.gov IDA page.

 

9/09