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Individual Development Account: Save Money and Get Matching Contributions

Posted In:  banking  retirement

IDA Research shows that there are “savers” and “spenders” in all income classes, even those who make low to moderate incomes. And where there’s a will for people truly motivated to save, the government has provided a way.

This was true for Lakeshia Robertson, a single mom with three children in Baton Rouge, Louisiana. For years her family rented an apartment threatened by the sound of gunshots at night and the occasional infestation of bats. But in 2008, the Robertson family celebrated Christmas in their newly owned home, thanks to the Individual Development Account (IDA) program.

What is an Individual Development Account?

The IDA is a public agency sponsored matching savings account designed specifically to help low-income families save money. Generally, your contribution will be matched from one dollar to up to eight dollars for every dollar you contribute (while you may contribute as much as you like, matches may only go up to a certain amount). 

Typically, these savings plans earmark money to help people buy a house, pay for education or job training, or to start a business. However, some plans allow you to save for home repairs, computers, automobiles, or retirement.

What’s the Catch?

There’s not really a catch, but there are other aspects of the program designed to help you learn to manage money. For example, IDA participants must attend financial education classes, as well as one-on one counseling, to help them learn about budgeting, saving, banking, using credit responsibly, and more.

Once you sign up for the IDA program, you will open an account with a partnering bank or credit union that will handle all of your transactions. You will receive a monthly statement that details your contributions, subsequent matching contributions, and any interest earned on the balance.

Depending on the program, an IDA matching plan may run anywhere from six months to five years. You are not allowed to withdraw matching money from the account until you have reached your savings goal and receive approval from the program sponsor (usually a nonprofit agency).

Some IDAs require you to deposit a minimum amount each month or so in order to stay in the program, so it’s important to make sure that you can save enough to make the minimum deposit.

Are You Eligible?

Since IDAs are designed for low-income families, naturally you must meet low-income criteria to qualify. The following are some general guidelines for IDA enrollment, although specific IDA programs many have varying qualifications.

Number of People In the Household

Income Limit

1 $20,800
2 $28,000
3 $35,200
4 $42,400
5 $49.700
6 $56,800
7 $64,000
8 $71,200


  • If you qualify for the Earned Income Tax Credit and your household net worth is less than $10,000 (excluding your house and one car).
  • Participants in the Temporary Assistance for Needy Families (TANF)  program are automatically eligible for the IDA program.
  • Typically all or part of your contributions must come from  earned income (as opposed to a gift from someone else). For the sake of the program, welfare, disability, Social Security, and unemployment benefits are all considered earned income.
  • If you have excess debt or a poor credit history, you many not qualify to open an IDA, since it’s tough to save while paying down debt. However, an IDA program sponsor may recommend you visit a credit counselor and, once you pay off substantial debt, you may yet qualify for the program.

Many IDA programs provide additional optional training classes to help you use your savings more wisely. Training may include home buying, small business development classes, or financial aid counseling. 

The program sponsor may also assist families in applying for welfare benefits, preparing tax returns (including how to qualify for the Earned Income Tax and Child Tax Credits), applying for affordable housing or financial aid, or legal advice. Be sure to ask the program in your area what additional services they may offer to help you get ahead.

For more information or to find an IDA program in your area, see the video and links below:

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