HB356 Alabama 2011 Session

Summary

Primary Sponsor

Mike Ball

Republican

Session

Regular Session 2011

Title

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

Summary

HB356 would create an Individual Development Account program in the Department of Human Resources to help low-income people save for and purchase specific assets.

What This Bill Does

It establishes the IDA program in the Department of Human Resources and allows eligible low-income individuals to open accounts through fiduciary organizations. Participants set savings goals, receive matching funds, and must complete financial literacy training and asset-specific education. When six months of savings are met, the goal is reached, and matching funds are released to pay for the asset; emergencies are allowed with repayment, and withdrawals for non-qualified uses can remove them from the program. Savings and qualified withdrawals are not counted as gross income for income tax, and they do not affect eligibility for means-tested public benefits.

Who It Affects

• Low-income individuals or families who may participate in the program, subject to income limits, and who save and train to receive matching funds for assets like education, home ownership, or business capitalization.
• Fiduciary organizations and financial institutions that administer and hold IDA accounts, provide counseling and education, verify eligibility, and manage matching funds and distributions.

Key Provisions

• Establishes the Individual Development Account Program in the Department of Human Resources and defines key terms (eligible individual, fiduciary organization, financial institution, qualified purposes, emergency, and parallel account).
• Allows eligible individuals to enter into agreements with fiduciary organizations for IDAs, specifying required deposits, match rates, asset goals, financial literacy classes, asset-specific training, counseling, and other services.
• Defines qualified purposes, including education, job training, first-time home purchase, home repairs, business capitalization, transportation, assistive technology, and other approved assets.
• Requires minimum six months of saving before matching funds are transferred from a parallel account to pay a vendor or service provider for the approved asset.
• Allows emergency withdrawals with fiduciary approval, requires repayment within 12 months, and removes the account owner from the program if funds are withdrawn for non-emergency or non-qualified purposes.
• Requires account holders to complete a financial literacy course before receiving matching funds; deposits come from earned income and certain benefits, with a cap of $2,000 on deposits.
• Provides tax treatment: deposits and withdrawals for qualified purposes are not gross income for federal income tax purposes; means-tested benefits are not affected by IDA savings or matching funds.
• Requires fiduciary organizations to administer the accounts, may partner with other entities, and may use up to 15% of funds for administration and evaluation; annual reports are required.
• Requires financial institutions to hold accounts in the owner's name, allow deposits, pay market interest, keep accounts fee-free, and permit withdrawals with fiduciary authorization for qualified purposes.
• Requires competitive selection of fiduciary organizations by the department and outlines factors to consider; department may issue rules to ensure compliance.
• Provides that the department is not obligated to fund parallel accounts or contracts unless the Legislature appropriates funds; the act becomes effective after a specified period.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Human Resources Department