The Assets For Independence (AFI) IDA Program by jlesterback


									              The Assets For Independence (AFI) IDA Program


      A Participant must be employed, since only earned income from the
      household can be put into an IDA. Proceeds from an Earned Income Tax
      Credit are considered earned income.

        An individual is eligible if:

              They are a member of a household that is eligible for assistance under
              the State Temporary Assistance for Needy Families Program (TANF) OR

              They are a member of a household whose Adjusted Gross Income, for
              the one-year period preceding their entrance into the Program, was
              under 200% of the Federal Poverty Income Guidelines. The Federal
              Poverty Guidelines can be found by putting the words “Federal
              Poverty Guidelines” into your web browser. (Be sure to specify the
              current year.) OR

              They are a member of a household whose Adjusted Gross Income
              does not exceed the eligibility amount for receiving the Earned
              Income Tax Credit for the size of their household. Eligibility for the
              current year’s Earned Income Tax Credit can be found by putting the
              words “Earned Income Tax Credit Eligibility” into your web browser.
              (Be sure to specify the current year.)

      The net worth of the household, as of the end of the calendar year
      preceding the determination of eligibility, cannot exceed $10,000,
      excluding a primary dwelling and one vehicle owned by a member of the

              The net worth of a household is calculated by subtracting the
              obligations or debts of any member of the household from the
              aggregate market value of all assets that are owned in whole or in
              part by any member of the household.

      The Assets for Independence Act defines “household” as “…all individuals
      who share use of a dwelling unit as primary quarters for living and eating
      separate from other individuals.”
Allowable Assets

    Funds may be withdrawn to purchase one of the three Allowable Assets no
    earlier than 6 months after the initial deposit by a Participant into their IDA,
    providing the Account Holder has reached his/her savings goal.

      A First Home Purchase. Participants may use their IDAs for the costs of
      acquiring, constructing or reconstructing a residence (not for renovation
      of an existing home). Allowable costs include any usual or reasonable
      settlement, financing, or other closing costs. Funds must be paid directly
      to the person(s) or institution(s) to whom the amounts are due.

          o   A Participant is a qualified first-time homebuyer if they (and, if
              married, their spouse) have had no present ownership interest in a
              principal residence during the 3-year period ending on the date of
              acquisition (the date on which a binding contract is signed) of the
              home purchased with their IDA.

          o   Homes can be purchased outside of the area where the IDA
              Program operates. The cost of the home cannot exceed 120% of
              the average area home purchase price for a comparable

          o   It is important that you be aware of the housing market in your
              area. You will want to steer Participants away from areas where
              housing prices are depreciating and away from poorly constructed
              homes that will likely not appreciate in value.

          o   Usually a Participant will need more than the savings in their IDA
              and their matching funds for their down payment on a home. You
              should research other sources of homeownership assistance and
              form partnerships with first-time homeownership programs so that
              these resources can supplement Participants’ IDAs.

      Higher Education. Participants may use their IDAs for post-secondary
      educational expenses paid directly to an eligible educational institution.

          o   Eligible expenses are tuition and fees required for enrollment or
              attendance, and fees, books, supplies, and equipment required for
              courses of instruction.

          o   An eligible educational institution is defined as an institution of
              higher education or a post-secondary vocational-technical
              educational school.

          o   The Perkins Act defines vocational-technical education as
              “organized educational programs offering sequences of courses
              directly related to preparing individuals for paid or unpaid
             employment in current or emerging occupations requiring other
             than a baccalaureate or advanced degree. Programs include
             competency-based applied learning that contributes to an
             individual’s academic knowledge, higher-order reasoning,
             problem solving skills, and the occupational-specific skills necessary
             for economic independence as a productive and contributing
             member of society.”

     Business Capitalization. Participants may use their IDAs for qualified
     business capitalization expenses. Funds must be paid directly into a
     business capitalization account that is established in a federally-insured
     financial institution and restricted for the sole use for qualified business
     capitalization expenses of the eligible individual in whose name the
     account is held.

         o   “Qualified business capitalization expenses” means expenditures
             related to a qualified Business Plan, including, but not limited to,
             capital, plant, equipment, working capital, and inventory

         o   Participants must have a Business Plan that has been approved by
             a financial institution, a business capitalization development
             organization, or a non-profit loan fund. The plan must include a
             description of services or goods to be sold, a marketing plan, and
             projected financial statements. This may require the Participant to
             obtain the assistance of an experienced entrepreneurial advisor.

Match Rate

    Programs can match up to 2:1, up to a maximum match of $3,000.
    Therefore, if a Participant saves $1,500 in their IDA they will receive a match
    of $3,000 for a total of $4,500 for their asset purchase. The match rate
    consists of $1 of Federal AFI grant and $1 of non-Federal match. Be sure to
    match at the rate that you specified in your original grant proposal.

         o   No more than 2 concurrent IDAs are allowed per household.

    No more than $1,000 in matching funds can be earned in any one calendar
    year. The maximum total match is $3,000 per individual and $6,000 per

    Participants earn interest on the funds that are in their IDA. This interest must
    be matched even if this results in a match that exceeds the $1,000 a
    year/$3,000 maximum limits.
Maximum Savings Goal

    Each Participant is encouraged to strive toward a goal of $1,500 in savings in
    order to receive the maximum allowable match (or $3,000 if the Program is
    matching $1: $1). Of course, Participants should be encouraged to save as
    much as is feasible, in order to build their assets faster, although the match
    limitation will apply regardless of higher personal savings. Any amount
    above the allowable goal of $500 per calendar year ($1,000 per calendar
    year if the program has received permission to match 1:1) should be
    deposited into a separate account opened by the Participant in their own

Suggested Topics for Asset-Specific Training/Savings Clubs

Homeownership Training
     Preparation for first home purchase
     Looking for a Home/Home buying process
     Credit issues
     Mortgage Application Process
     Mortgage pre-qualification requirements
     Mortgage product types
     First Home Ownership Programs in the Community
     Legal issues/The Closing
     Presentations by local realtors
     Life as a Homeowner
     Home Maintenance and Repair
     Foreclosure Prevention

Higher Education
       Financial Aid
       Choosing a College
    Agencies should use existing relationships with local institutions of higher
    learning and post-secondary vocational educational schools, as well as
    forge new relationships with such institutions.

Small Business/Entrepreneurial Training
       Entrepreneurial Training
       Individual Mentoring
       Developing a Business Plan
       Each agency will arrange for small business/entrepreneurial training to be
       provided by qualified individuals or entities. Group classes may be made
       available for general entrepreneurial training, and shall be followed by
       individualized training with small business training professionals.
Other Topics
          Tax issues
          Increasing Your Earning Potential
          Job Marketability
          Job Retention and Advancement
          Dealing with a Difficult Boss
          Handling Disputes with Co-Workers
          Asking for a Raise or a Promotion
          Advocating for Yourself
          Decision Making
          Critical Thinking Skills
          Motivational Issues
          Stress Reduction and Anger Management

Other groups that can be solicited to assist with Financial Education and/or
Savings Club presentations are:
         Housing Finance Authority (CHFA)
         Non-Profit Housing Agencies/Housing Authorities
         SBA-funded organizations/SCORE
         Women’s Business Development Agencies
         Community Colleges (Business Development of Entrepreneurial
         Local Chambers of Commerce
         Colleges/Financial Aid Representatives
         Trade Schools/Apprenticeships
         Job Training Entities/Workforce Development/Career Counselors
         Industry Associations
         Cooperative Extension Services

You can find experts on many of these topics who might be willing to come talk
to your classes. Also, information on many of these topics can be found on the

AFI Program Withdrawals

Participants who withdraw from the Program are prohibited from participating in
any other AFI Demonstration Project in the future.

If the Participant family moves from the community in which the AFI Program is
being operated there are two possible outcomes. If the Participant is moving to
a community where there is another AFI site, and if there are available slots in
that Program, the Participant has the opportunity, at the discretion of the IDA
Program Manager at the new site, to join that Program. If, however, there is no
AFI site in the community to which the Participant is moving, the individual is no
longer part of the AFI Program and is prohibited from future participation in an
AFI Program.

How assets in an AFI IDA affect eligibility for federal entitlement programs.

The funds deposited by Participants in their IDAs (including interest accrued on
those funds) shall not be considered to be the income, assets, or resources of the
individuals, for purposes of determining eligibility for, or the amount of assistance
furnished under, any Federal or Federally-assisted program based on need. The
matching funds are also not considered income, assets or resources for these

Making Changes to Your IDA Program Plan

If you wish to make any changes to the program plan that you specified in your
original program proposal, you must first get permission from DOL.

Assets For Independence Website

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