Individual Development Account (IDA)
  |
This section includes information about deposits and withdrawals from individual development accounts when the budgetary unit receives both NA and CA benefits.
Policy
Deposits and withdrawals from individual development accounts (IDA) applies to CA budgetary units and only applies to NA when the budgetary unit receives CA.
NOTE When the budgetary unit only receives NA benefits, FAA treats an IDA account like a savings account.
Treatment of income deposits made into an IDA varies depending on the source of the income deposited, all of the following apply:
●Educational income from any source deposited into an IDA is countable as unearned educational income.
●Any unearned income deposited into an IDA is not countable.
●50% of earned income per month, up to a maximum of $100, deposited into an IDA is not countable as earned income.
NOTE Earned income remaining on deposit into an IDA account, including interest earned and kept in the IDA account, is not countable as earned income.
●50% of self-employment income per month, up to a maximum of $100, deposited into an IDA is not countable as self-employment income.
NOTE Self-employment income remaining on deposit with an IDA account, including interest earned and kept in the IDA account, is not as self-employment income countable.
Treatment of withdrawals from an IDA varies depending on the deposit's source and the withdrawal's purpose when the budgetary unit receives both NA and CA benefits.
NOTE When the budgetary unit only receives NA, withdrawals are not considered income.
Withdrawals from an IDA can only be initiated by way of a vendor payment from the financial institution directly to the provider of the allowable goods or services to be considered not countable unearned income for any of the following:
●The money to pay educational costs from an accredited institution of higher education(g). Allowable educational and training costs that an IDA withdrawal would not count as income include all of the following:
Required tuition and other fees for enrollment or attendance at the institution
Lab fees, books, uniforms, rental, and purchase of any equipment, materials, and supplies required for the course of study
Transportation
Miscellaneous personal expenses that may include, and are not limited to, any of the following:
●Dependent care necessary for the student to attend school
NOTE FAA does not include an IDA withdrawal for dependent care as an educational expense for a childcare deduction.
●Recorders
●Computers
●Auto repair when necessary for school attendance
●The money to pay training costs from a licensed or certified training program that offers any of the following courses of study:
Vocational
Technical
Other courses of study
●The money to purchase a first home
●The money to pay business capitalization costs
When a participant withdraws money from an IDA for any purpose other than previously listed, the withdrawal may be countable as unearned income in the month withdrawn, depending on one of the following:
●Money previously counted as earned income to the budgetary unit is not countable when withdrawn.
●When withdrawals are made from an IDA into which both earned and unearned income has been deposited, only 50% of the withdrawal is not countable.
●When withdrawals are made from an IDA into which only unearned income has been deposited, the entire amount withdrawn is countable as unearned income.
For additional policies on the treatment of IDA accounts as a resource, see all of the following:
Countable income is used to determine an income budget. (See Income Budgeting to see how FAA determines the income budget.) FAA needs to know about income that is both countable and not countable to determine whether a budgetary unit’s income is exceeding their expenses. (See Income Eligibility for more information about how FAA uses countable and not countable income.)
Procedures
Deposits made into an individual development account (IDA) are determined to be countable or not countable based on all of the following:
●Previous history
●The participant or authorized representative’s statement of expected deposits
●When the deposits are made
Complete all of the following:
●Subtract the allowable IDA deposit (the non-countable portion) from the participant’s gross earned or self-employment income up to $100 monthly.
●Budget the remaining gross income using the applicable Income Code.
For more information on budgeting, see Income Budgeting.
When a participant withdraws money from an IDA, determine whether to count or not count the money as unearned income based on the source of the deposit.
When the participant is present, have them sign the Authority to Release (FAA‑1765A) form to contact any companies or businesses involved. The FAA-1765A can be faxed or emailed to the participant's employer when it is not possible to use the Application for Benefits (FAA-0001A) or the HEAplus Authority to Release Information signed statement.
Documentation must support determinations of eligibility and benefit level. Document in sufficient detail to ensure that any reviewer can assess whether the determination is reasonable and accurate. Include specific information regarding the reason the income is determined to be normal. (See Budgeting Income Documentation Requirements for additional information.)
Verification
System interface and the case file(g) must be reviewed before verification is requested. No additional verification is needed when AZTECS interface or HEAplus hubs have verified the information.
The participant has the primary responsibility for providing verification. (See Participant Responsibilities – Providing Verification for additional policy.)
For NA, all of the following income is required to be verified before eligibility is determined:
●Reported on a new application, during the interview of a new application, or changes reported before the eligibility determination of a new application.
●Changes after an eligibility determination of a new application (e.g., a renewal application, mid approval contact, etc.) and any of the following apply:
The source of the income has changed.
The income is questionable(g) or unclear(g).
The reported income amount has changed by $51 or more.
The previous verification in the case file is more than 59 calendar days old.
For CA, all income is required to be verified before determining eligibility.
Examples of verification that can be used for individual development accounts (IDA) include, and are not limited to, any of the following:
●Name and branch of the financial institution
●Date the account was opened
●Current balance in the account
●All IDA financial institution statements received since the opening of the account
●All IDA deposits (including amounts, interest) and the source of the deposited funds
●All IDA withdrawals, including the manner and reason for the withdrawals
●The amounts that are not countable as a resource and the reason not countable
●The amounts that are countable as a resource and the reason countable
●The total accumulative deposits throughout the lifetime of the IDA
Examples of verification that can be used for unearned income include, and are not limited to, any of the following:
●Assistance payments records
●Absent Parent
●Arizona Technical Eligibility Computer System (AZTECS) INTERFACE INQUIRY MENU (ININ) for verification of SSA or SSI income
●Benefit award letters from SSA, Statement of Earnings VA, and other agencies
●Bank records
●Court records or court orders
●DCSS documents or print outs
●Divorce or separation papers or contact with the Clerk of the Court
●Current check reflecting gross income (Do not copy federal government checks)
●Federal or state tax forms
●Household System Check (HOSC) information
●Insurance policies
●Mortgages and Sales Contracts
●Statement from the agency or payer providing the income
●State Data Exchange (SDX) microfiche
●Unemployment Insurance records
●Participant statement verification when one of the following occur:
Obtaining documented or collateral contact verification may cause harm or undue hardship(g) for the participant.
When all of the following occur:
●Other attempts to obtain the verification have failed. This includes documented and collateral contact verification.
●The participant has requested assistance from FAA.
●The worker has evaluated the request for assistance and cannot obtain the verification from another acceptable source.
●The participant statement is not questionable(g).
For Self-Employment Verification Sources:
When the participant is present, have them sign the Authority to Release (FAA‑1765A) form to contact any companies or businesses involved. The FAA-1765A can be faxed or emailed to the participant's employer when it is not possible to use the Application for Benefits (FAA-0001A) or the HEAplus Authority to Release Information signed statement.
Examples of verification that can be used for self-employment income and expenses include, and are not limited to, any of the following:
●Bookkeeping records
●Business ledgers listing income amounts received and expenses incurred
●Actual receipts
●Contracts for work
●Statements from patrons and companies
●Most recent Internal Revenue Service (IRS) U.S. Individual Income Tax Return (1040) form. Below are common IRS Schedule forms that the participant may provide in addition to the 1040:
Schedule C, Profit or Loss From Business
Schedule E, Supplemental Income and Loss
Schedule F, Profit or Loss from Farming
Schedules B-1, C, D, K, K-1, K-2, K-3, and M-3 of IRS U.S. Return of Partnership Income (1065) form (See Limited Liability Company (LLC) Definition for more information about LLCs.)
NOTE Do not use the most recent IRS 1040 and Schedule forms when the participant indicates it does not accurately reflect the participant's current income.
●Rent or mortgage receipt for business property
●Property tax statements for business property
●Utility costs for business property
●Cleaning cost bills for business property
●Business location and equipment maintenance
●Personal records indicating personnel salaries or costs of outside labor, such as canceled checks and payroll checks
●Participant’s statement for self-employment income, when one of the following apply:
Obtaining documented or collateral contact verification may cause harm or undue hardship(g) for the participant.
When all of the following occur:
●Other attempts to obtain the verification have failed. This includes documented and collateral contact verification.
●The participant has requested assistance from FAA.
●The worker has evaluated the request for assistance and cannot obtain the verification from another acceptable source.
●The participant statement is not questionable(g).
●Participant’s statement for self-employment expenses unless questionable.
NOTE When self-employment expenses are not verified, eligibility is determined without the 40% Self-Employment Expense deduction.
For Educational Income and Expenses Verification Sources:
Examples of verification that can be used for educational income and expenses include, and are not limited to, any of the following:
●Award letter
●Loan paper
●School
●Student expenses
●Bank loan funds
●Participant statement verification for transportation expenses
●Expense receipts
●School budget sheet or computer printout
Earned Income Verification
Examples of verification that can be used for Earned Income include, and are not limited to, any of the following:
●System interface(g) when the participant agrees that the information is accurate.
●A copy of a paycheck stub.
●Copy of checks when the gross earnings are listed.
●A printout from a third-party payroll verification source provided by the participant.
●Third-party payroll verification sources when the employer uses the verification source as its legal agent to provide payroll services or respond to inquiries about employee records. (See Third-Party Payroll Verification Sources(g) for FAA approved sources, additional information, and instructions for requesting additional sources.)
●A New Employment Verification (C005) notice that is completed, dated, and signed by the employer or their payroll authority. To be considered complete, the statement has to include all of the following:
Name, address, and telephone number of the employer
Gross pay for the periods needed
Frequency of pay (e.g., weekly, monthly, quarterly, etc.)
Day of the week or day of the month pay is received (e.g., Fridays, 5th and 20th of the month, first of the month, etc.)
Any expected change in pay
●For new or current employment verification, a completed Verification of New/Current Employment (FAA‑0053A) form that includes a date and the signature of the employer or their payroll authority.
●For terminated employment verification, any of the following completed items that include a date and the signature of the employer or their payroll authority:
Verification of Terminated Employment (FAA-1701A) form
Verification of Terminated Employment (C019) notice
●Letter from the agency providing government-sponsored training.
●Leave and Earnings Statement (LES) from the military.
●A collateral contact with the employer or their payroll authority.
NOTE Collateral contact is not used when contacting the employer would jeopardize the participant's employment or when the employer does not accept telephone verification.
●Participant statement verification when one of the following occur:
Obtaining documented or collateral contact verification may cause harm or undue hardship(g) for the participant.
When all of the following occur:
●Other attempts to obtain the verification have failed. This includes documented and collateral contact verification.
●The participant has requested assistance from FAA.
●The worker has evaluated the request for assistance and cannot obtain the verification from another acceptable source.
●The participant statement is not questionable(g).
NOTE Many companies do not allow verification over the telephone. When an FAA-0053A or FAA-1701A must be completed by any of the following, see the company’s contact information to determine where FAA staff must send the form:
AZTECS Keying Procedures
Keying Individual Development Account Deposits:
For deposits up to $100 per month into an Individual Development Account (IDA) that are not countable income, complete one or more of the following:
●Key earned income on EAIN, key the IX Income Type Code in the INCOME TYPE FIELD.
●Key self-employment income on SEEW, key the IC Income Type Code in the TYP field.
●Key unearned income on UNIN, key the IX Unearned Income Code in the INC TYPE field on UNIC
For deposits to an IDA that count as unearned educational income, complete each of the following:
●Key the amount on UNIE.
●Key IX in the TYPE field.
Keying IDA Withdrawals
IDA withdrawals for any reason other than for the purposes listed in the Policy Section key only the countable portion of the withdrawal, including interest paid directly to the budgetary unit.
Key the OT Unearned Income Code in the INC TYPE field on UNIC.
Document the case file(g) thoroughly to support keyed codes, amounts, and frequencies. See the AZTECS Data Entry Guide for instructions on keying the AZTECS income screens.
NOTE Documentation must support determinations of eligibility and benefit level. Document in sufficient detail to ensure that any reviewer can assess whether the determination is reasonable and accurate. Include specific information regarding the reason the income is determined to be normal. (See Budgeting Income Documentation Requirements for additional information.)
Legal Authorities
45 CFR 260.31(b)(5)
AAC R6-12-404
last revised 10/02/2023