HB774 Alabama 2010 Session

Summary

Primary Sponsor

Mike Ball

Republican

Session

Regular Session 2010

Title

Individual Development Account Program, established in Human Resources Department, created for individuals with low income

Summary

HB774 would create an Individual Development Account (IDA) Program within the Alabama Department of Human Resources to help low-income people save and build assets through matched funding, education, and approved asset purchases.

What This Bill Does

The bill authorizes eligible low-income individuals or families to enter into agreements with fiduciary organizations to establish IDAs with savings deposits, a matching fund, asset goals, financial literacy classes, asset-specific training, counseling, and other services. It allows funds to be matched under certain conditions and specifies which withdrawals qualify for using the funds (such as education, home purchase, or job-related needs), with emergency withdrawals allowed but non-qualified withdrawals resulting in removal from the program and required repayment of the match. It also protects IDA savings from affecting means-tested benefits and from counting as gross income for tax purposes, and it assigns oversight to fiduciary organizations and the Department of Human Resources.

Who It Affects

• Low-income individuals or families who meet income thresholds and may participate to build assets through IDAs.
• Fiduciary organizations and financial institutions that would administer, manage, and hold IDA accounts and ensure compliance with program rules.

Key Provisions

• Establishes the Individual Development Account Program within the Alabama Department of Human Resources and authorizes eligible low-income individuals or families to enter into agreements with fiduciary organizations to open IDAs.
• Agreements must specify savings deposits, matching fund rates, asset goals, required financial literacy education, asset-specific training, and financial counseling.
• Funds in IDAs may be matched under certain circumstances; withdrawals are allowed for qualified purposes such as education, postsecondary training, first-time home purchase (36 months not on title), home repairs, business capitalization, transportation to work/education, assistive technology, or other approved activities.
• Emergency withdrawals are permitted; withdrawals for non-qualified purposes remove the account from the program and require reimbursement of the amount withdrawn within 12 months, otherwise the account owner is removed from the program.
• Deposits must come from earned income or other specified sources; there is a $2,000 cap on deposits; participants may need to certify that deposits do not exceed income.
• Qualified withdrawals are not counted as gross income for federal or state income tax purposes; deposits and matching funds are not counted as income or assets for means-tested benefits.
• Fiduciary organizations are selected through competitive processes and must meet criteria related to administration, accountability, matching funds, financial counseling, and program design feasibility; they may partner with other entities and may use up to 15% of allocated funds for administration, operation, research, and evaluation.
• Financial institutions holding IDAs must keep the account in the owner's name, allow deposits, earn market interest, keep accounts fee-free, and permit withdrawals with written authorization from the fiduciary organization.
• The Department of Human Resources is not obligated to fund or contract for IDA parallel accounts unless the Legislature appropriates funds; program funding is limited to appropriations.

AI-generated summary using openai/gpt-5-nano on Feb 25, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Human Resources Department