45 C.F.R. Subpart C—What Rules Apply to Individual Development Accounts?
Title 45 - Public Welfare
The following definitions apply with respect to IDAs: Date of acquisition means the date on which a binding contract to obtain, construct, or reconstruct the new principal residence is entered into. Eligible educational institution means an institution described in section 481(a)(1) or section 1201(a) of the Higher Education Act of 1965 (20 U.S.C. 1088(a)(1) or 1141(a)), as such sections were in effect on August 21, 1996. Also, 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. 2471(4)) that is in any State (as defined in section 521(33) of such Act), as such sections were in effect on August 21, 1996. Individual Development Account (IDA) means an account established by, or for, an individual who is eligible for assistance under the TANF program, to allow the individual to accumulate funds for specific purposes. Notwithstanding any other provision of law (other than the Internal Revenue Code of 1986), the funds in an IDA account must be disregarded in determining eligibility for, or the amount of, assistance in any Federal means-tested programs. Post-secondary educational expenses means a student's tuition and fees required for the enrollment or attendance at an eligible educational institution, and required course fees, books, supplies, and equipment required at an eligible educational institution. Qualified acquisition costs means the cost of obtaining, constructing, or reconstructing a residence. The term includes any usual or reasonable settlement, financing, or other closing costs. Qualified business means any business that does not contravene State law or public policy. Qualified business capitalization expenses means business expenses pursuant to a qualified plan. Qualified entity means a nonprofit, tax-exempt organization, or a State or local government agency that works cooperatively with a nonprofit, tax-exempt organization. Qualified expenditures means expenses entailed in a qualified plan, including capital, plant equipment, working capital, and inventory expenses. Qualified first-time home buyer means a taxpayer (and, if married, the taxpayer's spouse) who has not owned a principal residence during the three-year period ending on the date of acquisition of the new principal residence. Qualified plan means a business plan that is approved by a financial institution, or by a nonprofit loan fund having demonstrated fiduciary integrity. It includes a description of services or goods to be sold, a marketing plan, and projected financial statements, and it may require the eligible recipient to obtain the assistance of an experienced entrepreneurial advisor. Qualified principal residence means the place a qualified first-time home buyer will reside in accordance with the meaning of section 1034 of the Internal Revenue Code of 1986 (26 U.S.C. 1034). The qualified acquisition cost of the residence cannot exceed the average purchase price of similar residences in the area. If the State elects to operate an IDA program, then the States may use Federal TANF funds or WtW funds to fund IDAs for individuals who are eligible for TANF assistance and exercise flexibility within the limits of Federal regulations and the statute. The following restrictions apply to IDA funds: (a) A recipient may deposit only earned income into an IDA. (b) A recipient's contributions to an IDA may be matched by, or through, a qualified entity. (c) A recipient may withdraw funds only for the following reasons: (1) To cover post-secondary education expenses, if the amount is paid directly to an eligible educational institution; (2) For the recipient to purchase a first home, if the amount is paid directly to the person to whom the amounts are due and it is a qualified acquisition cost for a qualified principal residence by a qualified first-time home buyer; or (3) For business capitalization, if the amounts are paid directly to a business capitalization account in a federally insured financial institution and used for a qualified business capitalization expense. To prevent recipients from using the IDA account improperly, States may do the following: (a) Count withdrawals as earned income in the month of withdrawal (unless already counted as income); (b) Count withdrawals as resources in determining eligibility; or (c) Take such other steps as the State has established in its State plan or written State policies to deter inappropriate use.
Title 45: Public Welfare
PART 263—EXPENDITURES OF STATE AND FEDERAL TANF FUNDS
Subpart C—What Rules Apply to Individual Development Accounts?
§ 263.20 What definitions apply to Individual Development Accounts (IDAs)?
§ 263.21 May a State use the TANF grant to fund IDAs?
§ 263.22 Are there any restrictions on IDA funds?
§ 263.23 How does a State prevent a recipient from using the IDA account for unqualified purposes?
