Community
Comptroller of the Currency
Administrator of National Banks
Developments
Community Affairs
Department Fact Sheet
Individual Development Accounts
What are Individual Development communities they serve by helping people
Accounts? build wealth.
Individual Development Accounts (IDAs) are How do IDA partnerships work?
matched savings accounts that enable low-
income and low-wealth individuals to save for IDA partnerships usually include non-
a specified goal within a defined time frame. profit or government agency sponsors and
The typical savings goals are homeownership, financial institutions. They may operate as
small business ownership, and post-secondary single programs or regional or statewide
education. IDA programs are offered as collaboratives. The sponsors are
partnerships between sponsoring organizations responsible for fundraising and program
(often non-profits or state/local governments administration -- including participant
agencies) and financial institutions. IDAs solicitation, training and technical
have been in existence for over 15 years, and assistance, and programmatic casework.
are similar to the matched savings The financial institutions are responsible
arrangements in 401(k) plans. for holding the sponsor’s and participant’s
accounts, and complying with program
Why participate in an IDA and regulatory requirements. The
financial institutions may also support the
program?
programs through operating grants to the
sponsoring organizations and/or
IDA programs present opportunities for contributions to the program match fund
financial institutions to expand into accounts.
underserved and emerging markets.
Program participants often exhibit loyalty
How are IDA programs
to financial institutions by opening
accounts and obtaining loans after structured?
reaching their savings goals. The
programs are also potentially eligible for Most financial institutions set up programs
consideration under all three of the large using a master account structure for the
bank CRA tests -- lending, investment, organization sponsoring the IDA initiative.
and service. IDA programs may also Individual savings accounts are then
promote and/or strengthen relationships opened for program participants.
with sponsoring non-profit organizations. Withdrawals are limited and are usually
IDAs provide an opportunity for financial only allowed with the authorization of the
institutions to contribute to the IDA program sponsor. Account fees and
minimum balance requirements are often
either reduced or waived. Statements are Temporary Assistance for Needy Families
typically provided monthly to the (TANF). However, most of the funding
participants and the organization. The sources vary in income eligibility
reporting requirements and fee reductions requirements for participants. Program
are often expensive for financial scale is an ongoing issue as most of the
institutions. However, many institutions five hundred IDA programs throughout the
have reported that the accounts maintained country nationally have fewer than one
by the sponsoring organizations, including hundred program participants. Many
match fund accounts, can help mitigate the financial institutions have elected to focus
costs associated with holding and on the community development benefits of
administering the small participant operating IDA programs, and have not
accounts. subjected the programs to profitability
reviews. In addition, most financial
What are the risks/regulatory institutions do not track actual loans made
to participants after savings goals have
requirements?
been achieved.
The primary risks related to IDA programs
are in the area of unauthorized For more information
withdrawals. Banks must have the
necessary controls in place to limit • The OCC’s IDA Insights Paper
withdrawals by program participants http://www.occ.treas.gov/ftp/release/200
without the approval of the sponsoring 5-25a.pdf
organizations. Banks should also ensure
that a program sponsor has the capacity to • OCC’s Web-site for information about
properly administer an IDA program. national bank community development
Banks are also accountable for compliance opportunities generally at:
with all of the regulations associated with www.occ.treas.gov/cdd/resource.htm
holding savings accounts such as
Regulation DD and the Customer • OCC’s District Community Affairs
Identification Program (CIP) rule Officers whose contact information can
implementing section 326 of the USA be obtained at:
PATRIOT Act. www.occ.treas.gov/cdd/commfoc.htm.
What are IDA program
challenges?
Funding requirements are a major concern
for IDA program sponsors. Both
operating and match funds are often
difficult to obtain. Match funds are
available from a variety of sources
including foundations, financial
institutions, state and local governments,
and federal programs such as the Assets
for Independence Act (AFIA) and
Revised August 2005 2