Individual Development Accounts
What is an Individual Development Account?
Individual Development Accounts (IDAs) are matched savings accounts that enable low- to moderate-income individuals to save money and build financial assets for the specified purposes of purchasing a home, paying for postsecondary education expenses, or starting a small business. The match incentive is similar to that of an employer match for 40(k) contributions.
Asset building is an anti-poverty strategy that helps low-income people move toward greater self-sufficiency by accumulating savings and purchasing long-term assets. The theory behind this approach is that helping people purchase an asset, as opposed to simply increasing their income, provides stability that may allow them to escape the cycle of poverty permanently. Examples of long-term assets include a home, higher education and training, and a business. IDAs are considered asset building programs.