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AFI Resource Guide: Matching IDA Holder Earned Income Deposits

Published: September 28, 2017
Assets for Independence (AFI)
Guidance, Policies, Procedures, Resource Guide

Matching Contributions to IDA Holder Earned Income Deposits

No less than once every three months, AFI grantees must match each participant’s earned income deposits with project funds (equal contributions of federal and non-federal funds) at a rate ranging from a minimum of $1 to a maximum of $8 for each dollar saved by a participant. Section 410 of the AFI Act requires that these matching contributions be actually deposited into either the participant’s IDA or a parallel account. The AFI Act does not allow grantees to retain the matching contributions in their Reserve Fund.

Managing Matching Contributions

Although it is allowable, it is not recommended that grantees deposit matching contributions directly into each participant’s IDA. Grantees must be able to ensure that withdrawals of matching contributions are approved by the grantee in writing and that all specific requirements for the target asset purchase have been met.  For example, making sure that a matched withdrawal for postsecondary education is paid directly to an eligible institution of higher education.

AFI grantees have two options for using a parallel account for matching contributions:

  • Deposit matching contributions for all IDA holders into a single parallel account; or
  • Deposit matching contributions for each IDA holder into a separate parallel account—one for each IDA holder.

In choosing between these options, grantees may want to consider the administrative burden on them as well as any operational issues with financial institution partners. Regardless of the management option, AFI grantees must track matching contributions on the individual participant level in order to be in compliance with the AFI Act.

AFI grantees must be able to demonstrate that matching contributions have been made in accordance with AFI Act requirements.  In order to comply with the matching contributions requirement, AFI grantees must:

  • Know exactly how much each IDA holder has deposited into their account and when they have made their deposit(s); and
  • Have sufficient non-federal and federal funds on hand to make the required matching contributions.
Last Reviewed: June 19, 2019