Research for this Policy Brief was funded by the Presidential Task Force on Employment of Adults with Disabilities.

Copies (including those needed in alternate formats) are available from the World Institute on Disability.

Readers are encouraged to photocopy and distribute this document. Acknowledgment of the source is appreciated.

Acknowledgments

The World Institute on Disability would like to acknowledge some of the people who have provided this Policy Brief with their time, energy and expertise:

Ray Boshara of the Corporation for Enterprise Development for his considerable knowledge of IDA policy and for his kind support and expansive expertise.

Julie Clark of the Presidential Task Force on Employment of Adults with Disabilities for her substantial knowledge in asset development and Social Security policy and for her editing advice and skill.

Bob Friedman of the Corporation for Enterprise Development and the Friedman Family Foundation for his generous contribution of resources, time and knowledge.

Jay Klein, Director of the Center for Housing and New Community Economics at the Institute on Disability at the University of New Hampshire, for his consistent, responsive and always invaluable recommendations and advice.

Bill McKinnon of the Presidential Task Force on Employment of Adults with Disabilities for his leadership in bringing this Policy Brief to publication.

Pam Salsedo of California Community Economic Development Association for the expertise she provided in the area of IDA program development and state IDA policy and for her generous availability of time and suggestions during the early stages of design and implementation of the WID IDA program.

Sarah Tom, University of California, Berkeley student, for her research skills and enthusiasm.

And, the IDA providers nationwide that we interviewed to assess the accessibility of IDA programs for people with disabilities. These IDA providers include, Stacy Hackle of ADVOCAP, Ed Ryan of Alternative Federal Credit Union, George Loew of the Bay Area IDA Collaborative, Gina Davis of Capital Area Asset Building Corporation, Linda Macris of Central Vermont Community Action Council, Jennifer Robey of Community Action Project of Tulsa County, Kathy Kane of Heart of American Family Services, Rebecca Talbot-Neely of Human Solutions, and Jennifer Tescher of Shorebank Corporation.

Executive Summary

People with disabilities are among the poorest citizens of the United States. As many as 70% of people with disabilities are unemployed¹ and 34% of adults with disabilities live in households with total income of $15,000 or less (compared to only 12% of those without disabilities).² Furthermore, low-income families are the least likely to have savings. The 1998 Survey of Consumer Finances (conducted by the Federal Reserve) states "… families with incomes below $20,000 (and whose head of household was aged 65 or younger) had median financial assets of only $600. Almost one-quarter of such families had zero financial assets."³

Asset development tools are a key element of economic development programs that have been created by Congress – with strong bipartisan support – over the last few years. Individual Development Accounts (IDAs), the grandparent of savings programs for the poor, were initiated as part of the welfare reform movement. The original concept of providing savings incentives through a matching program was developed as part of the Temporary Assistance for Needy Families (TANF) program, which replaced Aid to Families with Dependent Children (AFDC). But, savings incentives such as IDAs, and policies that support asset accumulation, have tremendous potential for Americans beyond those who receive TANF benefits.

It is difficult to disagree with the proposition that people with disabilities would benefit tremendously from this type of savings mechanism. Unfortunately, the current configuration of Social Security laws and IDA legislation present enormous barriers to full participation by people with disabilities. There are two primary barriers:

• Basic eligibility criteria for the Supplemental Security Income (SSI), a benefit program for people with disabilities administered by the Social Security Administration (SSA) - Individuals applying for SSI with more than $2,000 in resources will be found “not eligible,” regardless of the severity of their disability. For individuals already receiving SSI, if their resources go over $2,000, their SSI cash benefits (and potentially their related health benefits through Medicaid) are jeopardized.

• A second barrier exists in the design of Individual Development Accounts themselves, as defined in the Assets for Independence Act. Current IDA guidelines allow only earned income to be matched. Individuals who receive SSI and/or Social Security Disability Insurance (SSDI) as their sole source of income cannot set aside a portion of those benefits to be matched in an IDA, and are thus excluded from participation unless they also have some earnings. For IDAs to be truly accessible there needs to be a change in the IDA legislation so that people with disabilities can apply their SSI and/or SSDI funds to IDAs.

This Policy Brief discusses these two major statutory barriers that currently prevent full participation in IDAs by people with disabilities, and presents recommendations for change. Changes to both the Social Security Act and all Federal and State IDA legislation are needed in order to maximize participation by people with disabilities.

In addition, we strongly recommend that the New Freedom Initiative and/or the Presidential Task Force on Employment of Adults with Disabilities form an cross-agency work group to provide the leadership, collaboration and coordination necessary to develop an overall strategy for eliminating the barriers currently blocking widespread use of IDAs by people with disabilities, including recommendations for needed statutory and regulatory changes and further research needs.

Finally, we recommend that key stakeholders in IDA policy and program development, including disability leaders, hold a summit meeting to produce recommendations to address barriers to IDA participation that are experienced by people with disabilities.

I. Background

A. History of Individual Development Accounts

Economic well-being does not come solely from income, spending, and consumption, but also requires savings, investment, and accumulation of assets, because assets can improve economic independence and stability, connect individuals within viable and hopeful future, stimulate development of human and other capital, and enhance the welfare of offspring.⁴

Asset accumulation programs actually first emerged in domestic policy in the 1970s with the creation of such savings vehicles as Individual Retirement Accounts (IRAs), Roth IRAs and 401(k)s. These programs provide savings incentives through tax relief targeted at the middle to upper class. Individual Development Accounts (IDAs) are special savings accounts for low-income families that can be used for the purchase of a first home, higher education, or small-business capitalization. IDAs are like 401(k)s except that: (1) IDAs use matching deposits instead of tax breaks as the incentive to save; and (2) people saving in an IDA do so with the help of a non-profit organization that usually requires economic literacy training.”⁵

IDAs were first proposed in the mid-1980’s in the highly acclaimed and broadly disseminated publication Assets and the Poor, written by Michael Sherradon, which introduced the concept of saving through government-sponsored match programs.⁶ However, it wasn’t until the welfare reform efforts by the Clinton Administration and Congress in the mid-90s that much enthusiasm for IDAs was generated. In 1996 Congress passed the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) authorizing states to create community-based IDA programs with TANF block grant funds, disregarding all money saved in IDAs when determining eligibility for means-tested government assistance.

Although IDAs were initially developed as a component of welfare reform, the long-term goal of Michael Sherradon and many other proponents of asset accumulation strategies was to reach a broader segment of society, envisioning IDAs as a “family development program” that could be used by any “low-wealth” household.

To some extent this has happened. IDA savings products are now created under various Federal programs aimed to broaden their applicability, the U.S. Treasury Department’s Bank Enterprise Awards program and various initiatives under the Community Reinvestment Act. There are also IDA-like vehicles, such as Family Self-Sufficiency Accounts, administered by public housing authorities around the country and sponsored by the United States Department of Housing and Urban Development (HUD).⁷ In addition, 44 states have some type of IDA policy or initiative, with none of the state-funded IDA programs limited to just TANF recipients. But major policy barriers, in both the Social Security Act and in IDA legislation, prevent people with disabilities from actively setting up and utilizing IDAs.

B. The Importance of Asset Development for People with Disabilities

It’s estimated that over one-half of all Americans have either no, negligible, or negative assets available for investment, just as the price of entry to the economic mainstream, the cost of the health, an adequate education, and starting a business, is increasing.⁸ People with disabilities are among the poorest in our nation. About 1 in 5 Americans have a disability, and 1 in 10 have a significant disability.⁹ People with significant disabilities have an unemployment rate of approximately 70%.¹⁰ This is more than twice that of the general population and has remained at that level for many years. This is the poorest rate of participation in the work force and the highest rate of unemployment of any group in American society.

Over 34% of adults with disabilities live in households with total income of $15,000 or less, compared to only 12% of those without disabilities. Among people with disabilities who are working, income levels are well below those without disabilities. Individuals who receive the maximum amount of monthly SSI disability benefits still hover slightly below the Federal Poverty Income Level, often leaving them only one sickness, one accident, or one divorce away from poverty. While U.S. income maintenance policies attempt to ensure basic income for food and shelter to low-income families, means-tested government assistance, such as TANF and SSI, do not allow people to get out of poverty.

It has been shown with that for individuals with low incomes, accumulating assets through an IDA that can be used for housing, employment or post-secondary education could be a powerful tool to help people with disabilities move out of poverty and toward economic independence. This tool is especially timely for people with disabilities. Only 10% of people with disabilities own homes compared to 71% of those without disabilities.¹¹ Furthermore, despite the important link to the community that a computer and Internet access can provide to person with a disability, only 25% of people with disabilities own computers compared to 66% of U.S. adults without disabilities.¹²

IDA participation has even been found to have the most impact on the poorest participants, which is seen in both behavior change and in the amount of savings accrued compared to higher income participants. The very poor changed their saving behavior the most in response to financial education and social pressure from staff and peers.¹³ It has also been documented that individuals and families that are at half of the poverty line saved approximately 8% of their income while households between 50-125% saved about 4% of their income.¹⁴ For individuals with disabilities who receive SSI and/or SSDI, and are using SSA’s “work incentives” to attain or retain employment, the complementary goals of IDAs and new policies under the Ticket to Work and Work Incentives Improvement Act of 1999 offer additional opportunities.

The benefit of IDA participation goes beyond just accruing savings. As many as 93% of current IDA participants reported that they feel more confident about their futures and 85% said they felt more in control of their lives.¹⁵ Furthermore, 73% said they were more likely to buy or renovate a home and 57% said they would start or expand a business.¹⁶ Ultimately, escape from poverty is usually the result of people investing in themselves, their children, property, or in enterprise to improve their circumstances.¹⁷

Stacey’s Story

Stacey has seen many changes in her life in the past ten years. When she lost her job with PG&E seven years ago, she began running the streets and using drugs. However, two years later, Stacey changed her lifestyle once she discovered that she was pregnant. In August of 1995, Stacey gave birth to a healthy baby boy, Dominick. She stayed at home the next three years, caring for her son and struggling to make ends meet with her meager welfare stipend. Although unemployed, Stacey started making steps towards a new life by volunteering at the school her son attended. Eventually, Stacey enrolled in Legal Employment Action Program (LEAP), a job readiness training program, and began pulling her new life together. Since graduating from LEAP and gaining employment with Folger Levin & Kahn LLP, Stacey has begun to work towards other goals and dreams.

Through LEAP, Stacey was introduced to the new IDA Program started last year called Savings and Self-Sufficiency (SASS) that specifically serves current and former welfare recipients. Pursuing her next dream -Stacey is saving for a home. After less than a year in the IDA program, she has almost reached her savings maximum of $2,000 and has been keeping her eyes open for a house. “I want my son to see that everybody doesn’t live in the ghetto. He is always drawing pictures of a house with an apple tree in the front. He’s looking forward to it, and I am looking forward to it.”

Stacy’s story is typical of how IDAs have benefited people without disabilities and illustrates the potential for people with disabilities.

First-time home ownership has been the most popular of the three IDA savings goals. Over 25 families have achieved the dream of being homeowners in the last two years with the help of their IDA funds. ¹⁸

II. Barriers to IDA Participation by People with Disabilties

A. Introduction

... whatever the limitations associated with particular disabilities, people with disabilities have been saying for years that their major obstacles are not inherent in their disabilities, but arise from barriers that imposed are externally and unnecessarily.¹⁹

Barriers preventing universal access to IDAs are becoming more broadly recognized as an important and timely issue by policymakers and other stakeholders. Because IDAs were launched as part of welfare reform, consideration of (or changes in) eligibility requirements for other Federal means-tested programs, which would have allowed broad-based participation were not included.

For IDAs to be a meaningful asset development tool for people with disabilities they need to be evaluated through a different lens than that used by their original proponents and supporters. For example:

• Individuals with disabilities who receive Supplemental Security Income (SSI) need to be able to set up IDAs without fear of losing all their cash benefits and much-needed medical coverage.

• Those individuals with disabilities who receive SSI and/or SSDI, and are not currently working, should be able to participate in IDAs by using their monthly benefits as their savings resource. Participation without the earned income requirement will open doors to IDA participants who are not able to work but who still may have special needs for which the savings may be used.

Although many people with disabilities will want to use IDA savings toward homeownership, business capitalization or for further schooling, there may be additional (although related) uses that also promote economic independence, such as assistive technology.

B. Barriers Presented by the Social Security Act

Under the Social Security Act, individuals cannot be eligible for Supplemental Security Income (SSI) disability benefits if they have more than $2,000 in countable assets (and no more than $3,000 for a couple). The resource limit has stayed at $2,000 since 1989, clearly not keeping pace with increases in the cost of living or the rise in inflation. These resource rules summarily prohibit SSI beneficiaries from having IDAs because the assets are counted against benefits. According to the Center on Budget and Policy Priorities,

“Both theory and the available evidence generally suggest that asset tests under means-tested benefit can reduce saving among lower-income families. Policy-makers seeking to bolster saving rates among lower-income families--the families with the lowest levels of financial assets--may want to re-examined the current asset tests. Reforms in such tests could raise saving rates among low-income families. Such reforms, to be sure, may come at the cost of lessening somewhat the targeting of the programs. Given the extremely low levels of assets allowed under the tests and the lack of indexing in those levels, however, and increase in the level of allowable assets combined with indexing in the future seems represent sound policy.”²⁰

Not all resources are counted though. The Social Security Act provides that some resources are excluded from consideration (e.g., the SSI beneficiary’s home, household goods and personal items, a car used for employment or medical care). In addition, funds set aside in a Social Security approved “Plan for Achieving Self-Support” (PASS), a plan for SSI beneficiaries that allows participants to set aside money for employment related goals, are excluded from consideration as a resource for a specified amount of time. [See Appendix 1 for a complete list.]

Proposed Solution - Revising the Social Security Act’s SSI resource limitations by either increasing the limits, or disregarding funds put into an IDA for a specific purpose related to economic independence (with the ultimate goal of moving off of benefits), would remove the single greatest barrier to IDA participation facing many individuals with significant disabilities. Additionally, it would be consistent with other SSI and Medicaid changes that were part of the Ticket to Work and Work Incentives Improvement Act of 1999, which focuses on removing economic disincentives to employment.

• Congress should amend the Social Security Act [42 U.S.C. Section 1382b, Exclusions from Resources] to specifically exclude funds held in state, federally- or privately-sponsored IDAs as countable resources for purposes of SSI eligibility. This change would play a big part in making it possible for people with disabilities to accrue assets in specified savings vehicles that ensure greater independent living choices and economic independence.

• In the alternative, Congress and/or the Social Security Administration should amend the relevant statute and regulations in order to increase the SSI resource limit and index it annually. [Note: As this Policy Brief goes to print, such an increase has been proposed in HR 739, the SSI Modernization Act of 2001, introduced on February 27, 2001 by Rep. Benjamin Cardin]

C. Barriers Presented by the Assets for Independence Act

While the majority of individuals with disabilities who receive SSI and/or Social Security Disability Insurance (SSDI) want to start or return to work, not all are able to work full-time or even part-time. Nonetheless, this does not mean these individuals would not be interested in setting aside any portion of their benefits, and/or any other non-earned income they might receive, such as gifts, in an IDA that could ultimately help them return to work and become economically independent.

The Assets for Independence Act (AFIA), Section 408-Eligibility for Participation, currently requires that an individual have earned income in order to participate in IDA programs. Because of the inherent limitations this requirement poses for people with disabilities it should be eliminated. Allowing only earned income to be matched and placed into an IDA prevent many individuals with disabilities from participating.

Proposed Solution - Congress needs to amend the Assets for Independence Act to:

• Eliminate the earned income requirement entirely or, in the alternative,

• Add Social Security Disability Insurance (SSDI) benefits [which are based on previous employment and earnings] and/or SSI as an additional source of income that can be matched for the specified purposes of an IDA.

III. Other Related IDA Issues

At the point the eligibility barriers are removed, and individuals with disabilities are able to participate more fully in setting up IDAs, there are two additional specific barriers relating to continued participation that need to be addressed:

• The first is that of physical and programmatic barriers erected by the providers and community organizations themselves that may keep people with disabilities from taking full advantage of IDA possibilities even if they are eligible.

• The second is the limited uses for IDA funds – purchase of home, education, and capitalization of a business – which may not be the only uses most beneficial in moving a person with a disability toward economic independence.

Although not the focus of this Policy Brief, it is important to mention these two barriers here and keep them in mind in all legislative reform, public education and outreach efforts.

A. Physical and Programmatic Access

In 1999, WID completed field research, where staff gathered information from IDA providers who were participants in the Down-Payment on the American Dream Policy Demonstration and organizations on the IDA list serve administered by the Corporation for Enterprise Development. The findings showed that a major barrier to participation of people with disabilities, as seen from the eyes of the providers, was a lack of accommodations (and a lack of information about how to provide accommodations). For example, a third of the providers interviewed stated they did not have the resources to best serve people with disabilities. Their perceived needs include money to hire sign language interpreters for people who were deaf, special services for individuals with disabilities who were homebound, and transportation for those with mobility limitations. IDA providers have a strong interest in meeting the need to people with disabilities and in general have shown a vested interest in learning methods for doing so.

B. Restrictions on Use of Individual Development Account Funds

IDA program design requires that savings be applied toward business capitalization, homeownership or post-secondary education only. In order to achieve economic independence, people with disabilities may need to apply IDA assets toward a broader range of purposes.

For example, the purchase of an automobile can be a critical and essential element of economic independence for people with disabilities, especially for those who live in rural areas. The Montana University Affiliated Rural Institute on Disabilities found that for people with disabilities living in rural areas, transportation is a major challenge. Lack of transportation is one of the most frequent, significant, and persistent problems they face. Without reliable transportation, people with disabilities often have to restrict their life choices, including what school to go to, and where or whether to work. Other critical needs may include specific home adaptations such as putting in wheelchair ramps or a stair lift and/or assistive technology.

Congress could amend the Assets for Independence Act by adding these additional uses, or “qualified expenses.”

IV. New IDA Initiatives

A. The 107th Congress

The Savings for Working Families Act of 2001 (SWFA), sponsored by Senators Santorum (R-PA) and Lieberman (D-CT) and Representatives Pitts (R-PA) and Stenholm (D-TX) is the most recent and most progressive IDA legislation to date. As of the date of this publication, Corporation for Enterprise Development (CFED) reports that this legislation will be introduced as a stand-alone bill in late April or early May of 2001.²¹ Since the status of IDA legislation development is ever-changing we recommend that up-to-date information be obtained through CFED in Washington DC.

Through SWFA, IDAs would be available to any U.S. citizen between the age of 18 and 60, with a federal Adjusted Gross Income of not more than $20,000 for an individual, $25,000 for the head of household or $40,000 for a married couple. IDAs would be administered by qualified financial institutions, nonprofits, credit unions and Tribes. People with disabilities who receive SSI would be able to participate (even without earned income), since “individual deposits, matching funds, and all accrued interest would be disregarded in determining eligibility for other means tested federal programs.” (CFED)

B. IDA Pilot Program for People with Disabilities

The World Institute on Disability’s Individual Development Account Program for People with Disabilities is working to increase access to IDA programs. One of the primary goals of this three-year project, currently underway, is the development of strategies for improving access to IDAs by people with disabilities, from both a practical programmatic level and the state and federal legislative level. In its first year, WID is working in partnership with the Bay Area IDA Collaborative, a division of the East Bay Asian Local Development Corporation (EBALDC).

TANF recipients are the primary participants in the project. Recent findings by the Center on Budget and Policy Priorities (CBPP), indicate that as few as 12.2% to as many as 80% of TANF recipients have any of a broad range of physical or mental disabilities in various states across the nation.²² CBPP’s state-by-state national research found that as many as 53.2% of TANF recipients reported having a physical disability. A great many respondents in this research were found to have psychiatric disabilities including clinical depression, post traumatic stress disorder and general anxiety disorder. Furthermore, in the course of the research as many as 49% were found to have learning disabilities, which in some cases were previously undiagnosed. Commonly reported physical disabilities included arthritis, asthma, back injury, obesity, diabetes, thyroid problems and migraines.

Since this research shows that many TANF recipients have disabilities, the information gathered in the WID IDA Program for People with Disabilities should yield insights on the rate of participation by people with disabilities, issues and concerns they have, and their accommodation needs.

In 2001, the Project’s first year, the four main areas being worked on are the following:

• Intake System: An intake system is currently being developed and tested to accurately count the number of people with disabilities participating in the Bay Area IDA Collaborative and assess the accommodation needs of participants. It is hoped this will yield information of value to IDA program administrators nationwide and encourage them to utilize the model for their own programs.

• Training: Training is being provided to IDA administrators three times a year on how to work sensitively with people with disabilities and how to comply with all aspects of the Americans with Disabilities Act, including providing appropriate accommodations.

• Community Collaboration: An advisory committee made up of individuals with disabilities, representatives from disability organizations, and other stakeholders is being organized as a vehicle for sharing information and resources, and to enhance the provision of services to people with disabilities.

• Consumer Involvement: Interviews and focus groups are being conducted with participants with disabilities regarding their experience in the IDA program and suggestions for improvements.

In 2002 (Year Two), the Project will expand its reach statewide in California. Depending on available funding, additional partner organizations will be brought into the program planning and implementation and state and Federal legislative issues will be analyzed in detail. It is also anticipated that a key element of the second year will be disability training programs for IDA providers, and public education on IDAs for people with disabilities and their families. In the final year of the project, 2003, we hope to expand nationwide, with an emphasis on training, public education, and policy reform efforts

V. Conclusion

There are two primary legislative barriers that keep individuals with disabilities from setting up Individual Development Accounts, both of which would require Congressional action and amendments:

• Amending the Social Security Act by increasing the SSI resource limits or providing the IDA funds are an excludable resource for purposes of SSI eligibility; and

• Amending the Assets for Independence Act to allow for IDAs to have matched contributions that are made from SSI and/or SSDI funds, in addition to earned income.

In addition, once the eligibility barriers are removed, two specific concerns relating to individuals with disabilities need to be researched further and addressed:

• Physical and programmatic access to community programs that work with individuals setting up and maintaining IDAs; and

• The limited uses for IDA funds.

To develop and implement strategies for making these changes and addressing these concerns, we strongly recommend that:

• The New Freedom Initiative and/or the Presidential Task Force on Employment of Adults with Disabilities form an cross-agency work group to provide the leadership, collaboration and coordination necessary to develop an overall strategy for eliminating the barriers currently blocking widespread use of IDAs by people with disabilities, making recommendations for needed statutory and regulatory changes and further research needs, and sharing information about IDAs and IDA-like programs that exist and are being developed in Federal agencies.

• The World Institute a Disability and other disability representatives, IDA industry leaders, government agencies, and relevant nonprofit and private sector organizations hold a summit meeting to develop a platform statement of recommendations for addressing policy and programmatic barriers to IDA participation that are experienced by people with disabilities.

• Additional research and information gathering be carried out, including:

• Focus groups across the country, collecting feedback from people with a broad range of disabilities, on how IDAs can best meet their needs.
  
• A more accurate assessment of how many individuals with disabilities currently are participating in IDA programs, including possible revisions the data base system currently used by most IDA providers.

Appendix 1

Social Security Act: Title XVI

Supplemental Security Income for the Aged, Blind, and Disabled

Section 1613 [42 U.S.C. 1382b] - Resources/Exclusions from Resources

SEC. 1613. [42 U.S.C. 1382b] (a) In determining the resources of an individual (and his eligible spouse, if any) there shall be excluded—

(1) the home (including the land that appertains thereto);

2. (A) household goods, personal effects, and an automobile, to the extent that their

3. total value does not exceed such amount as the Commissioner of Social Security determines to be reasonable; and

(B) the value of any burial space or agreement (including any interest accumulated thereon) representing the purchase of a burial space (subject to such limits as to size or value as the Commissioner of Social Security may by regulation prescribe) held for the purpose of providing a place for the burial of the individual, his spouse, or any other member of his immediate family;

(3) other property which is so essential to the means of self-support of such individual (and such spouse) as to warrant its exclusion, as determined in accordance with and subject to limitations prescribed by the Commissioner of Social Security, except that the Commissioner of Social Security shall not establish a limitation on property (including the tools of a tradesperson and the machinery and livestock of a farmer) that is used in a trade or business or by such individual as an employee;

(4) such resources of an individual who is blind or disabled and who has a plan for achieving self-support approved by the Commissioner of Social Security, as may be necessary for the fulfillment of such plan;

(5) in the case of Natives of Alaska, shares of stock held in a Regional or a Village Corporation, during the period of twenty years in which such stock is inalienable, as provided in section 7(h) and section 8(c) of the Alaska Native Claims Settlement Act;

(6) assistance referred to in section 1612(b)(11) for the 9-month period beginning on the date such funds are received (or for such longer period as the Commissioner of Social Security shall by regulations prescribe in cases where good cause is shown by the individual concerned for extending such period); and, for purposes of this paragraph, the term "assistance" includes interest thereon which is excluded from income under section 1612(b)(12);

(7) any amount received from the United States which is attributable to underpayments of benefits due for one or more prior months, under this title or title II, to such individual (or spouse) or to any other person whose income is deemed to be included in such individual's (or spouse's) income for purposes of this title; but the application of this paragraph in the case of any such individual (and eligible spouse if any), with respect to any amount so received from the United States, shall be limited to the first 6 months following the month in which such amount is received (or to the first 9 months following such month with respect to any amount so received during the period beginning October 1, 1987, and ending September 30, 1989), and written notice of this limitation shall be given to the recipient concurrently with the payment of such amount;

(8) the value of assistance referred to in section 1612(b)(14), paid with respect to the dwelling unit occupied by such individual (or such individual and spouse);

(9) for the 9-month period beginning after the month in which received, any amount received by such individual (or such spouse) from a fund established by a State to aid victims of crime, to the extent that such individual (or such spouse) demonstrates that such amount was paid as compensation for expenses incurred or losses suffered as a result of a crime;

(10) for the 9-month period beginning after the month in which received, relocation assistance provided by a State or local government to such individual (or such spouse), comparable to assistance provided under title II of the Uniform Relocation Assistance and Real Property Acquisitions Policies Act of 1970 which is subject to the treatment required by section 216 of such Act;

(11) for the month of receipt and the following month, any refund of Federal income taxes made to such individual (or such spouse) by reason of section 32 of the Internal Revenue Code of 1986 (relating to earned income tax credit, and any payment made to such individual (or such spouse) by an employer under section 3507 of such Code (relating to advance payment of earned income credit);

(12) any account, including accrued interest or other earnings thereon, established and maintained in accordance with section 1631(a)(2)(F); and

(13) any gift to, or for the benefit of, an individual who has not attained 18 years of age and who has a life-threatening condition, from an organization described in section 501(c)(3) of the Internal Revenue Code of 1986 which is exempt from taxation under section 501(a) of such Code--

(A) in the case of an in-kind gift, if the gift is not converted to cash; or

(B) in the case of a cash gift, only to the extent that the total amount excluded from the resources of the individual pursuant to this paragraph in the calendar year in which the gift is made does not exceed $2,000.

In determining the resources of an individual (or eligible spouse) an insurance policy shall be taken into account only to the extent of its cash surrender value; except that if the total face value of all life insurance policies on any person is $1,500 or less, no part of the value of any such policy shall be taken into account.

Appendix 2

Community Opportunities, Accountability,

and Training and Educational Services Act of 1998:

Title IV - Assets for Independence Act (Public Law 105-285)

Section 410 - Qualified Entities

(a) (1) from the non-federal funds described in section 405(c)(4), a matching contribution of not less than $0.50 and not more than $4 for every $1 of earned income (as defined in section 911(d)(2) of the Internal Revenue Code of 1986) deposited in the account by a project participant during that period.²³

APPENDIX 3

Community Opportunities, Accountability,

and Training and Educational Services Act of 1998:

Title IV - Assets for Independence Act (Public Law 105-285)

Section 404 (8) Qualified Expenses

(8) Qualified expenses. The term “qualified expenses” means one or more of the following, as provided by a qualified entity:

(A) Postsecondary educational expenses. Postsecondary educational expenses paid from an individual development account directly to an eligible educational institution. In this subparagraph:

1. Postsecondary educational expenses. The term "postsecondary educational expenses" means the following: (I) Tuition and fees. Tuition and fees required for the enrollment or attendance of a student at an eligible educational institution. (II) Fees, books, supplies, and equipment. Fees, books, supplies, and equipment required for courses of instruction at an eligible educational institution.

2. Eligible educational institution. The term “eligible educational institution” means the following: Institution of higher education—an institution described in section 101 or 102 of the Higher Education Act of 1965. (II) Postsecondary vocational education school. 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. 247 (4))) which is in any State (as defined in section 521 (33) of such Act), as such sections are in effect on the date of enactment of this title.

(B) First-home purchase. Qualified acquisition costs with respect to a principal residence for a qualified first-time homebuyer, if paid from an individual development account directly to the persons to whom the amounts are due. In this subparagraph:

1. Principal residence. The term “principal residence” means a main residence, the qualified acquisition costs of which do not exceed 100 percent of the average area purchase price applicable to such residence.

2. Qualified acquisition costs. The term “qualified acquisition costs” means the cost of acquiring, constructing or reconstructing a residence. The term includes any usual or reasonable settlement, financing, or other closing costs.

3. Qualified first-time homebuyer. (I) In general. The term “qualified first-time homebuyer” means an individual participating in the project involved (and, if married, the individual’s spouse) who has no present ownership interest in a principal residence during the three-year period ending on the date of acquisition of the principal residence to which this subparagraph applies. (II) Date of acquisition. The term “date of acquisition” means the date on which a binding contract to acquire, construct, or reconstruct the principal residence to which this subparagraph applies is entered into.

3. Business capitalization. Amounts paid from an individual development account directly to a business capitalization account that is established in a federally insured financial institution (or any State insured financial institution if no federally insured financial institution is available) and is restricted to use soley for qualified business capitalization expenses. In this subparagraph:

1. Qualified business capitalization expenses. The term “qualified business capitalization expenses” means qualified expenditures for the capitalization of a qualified business pursuant to a qualified plan.

2. Qualified expenditures. The term “qualified expenditures” means expenditures included in a qualified plan, including capital, plant, equipment, working capital, and inventory expenses.

3. Qualified business. The term “qualified business” means any business that does not contravene any law or public policy (as determined by the Secretary).

4. Qualified plan. The term “qualified plan” means a business plan, or a plan to use the business asset purchased, which (I) is approved by a financial institution, a microenterprise development organization, or a nonprofit loan fund having demonstrated fiduciary integrity; (II) includes a description of services or goods to be sold, a marketing plan, and projected financial statements; (III) may require the eligible individual to obtain the assistance of experience entrepreneurial adviser.

3. Transfers to IDAs of family members. Amounts paid from an individual development account directly into another such account established for the benefit of an eligible individual who is –

1. the individual’s spouse; or

2. any dependent of the individual with respect to whom the individual is allowed a deduction under section 151 of the Internal Revenue Code of 1986.

Appendix 4

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Notes