PURPOSE

Both S.922 and S.6 ensure that our nation's savings and ownership policies assist working-poor families by enabling them to save, build wealth, and enter the financial mainstream through the use of a financial product tailored to their needs: Individual Development Accounts (IDAs).

IDAS ARE AN ECONOMIC INVESTMENT WITH A SOCIAL BENEFIT
IDAs are matched savings accounts restricted to three uses that help low-income families build appreciating assets: (1) buying a first home; (2) receiving post-secondary education; or (3) starting or expanding a small business. These assets help families become financially self-reliant.

IDAS INVEST IN LOW-WAGE WORKING PEOPLE WHO INVEST IN THEMSELVES
Under S.922, IDAs would be available to 900,000 citizens or legal residents of the U.S. between the ages of 18 and 60 (except students), and whose federal adjusted gross income does not exceed $20,000 (single), $30,000 (head of household), or $40,000 (married). Currently, there are 500 IDA programs in the U.S. that serve more than 20,000 savers.

IDAS RELY ON PARTNERSHIPS BETWEEN THE PRIVATE AND PUBLIC SECTOR
IDA programs are run by community-based organizations in partnership with a qualified financial institution that holds the deposits. The community organization - usually a nonprofit, tribe, public housing authority, credit union, or community development financial institution - recruits working individuals or families into the program and provides financial education. The family sets up a savings account and begins to make deposits.

Under S.6 and S.922, the financial institution would provide matching deposits into a separate, parallel account that matches dollar for dollar what the individual saves. When the accountholder has accumulated enough savings and matching funds to purchase the asset (typically over two to four years), and has completed a financial education course, payments from the IDA is made directly to the asset provider such as a college, or financial institution.

Under S.6 and S.922, financial institutions would be reimbursed for the matching funds they provide, plus a limited amount of the program and administrative costs incurred, specifically:

The aggregate amount of dollar-for-dollar match funding provided (up to $500 per person per year), plus an annual $50 per account credit to maintain the account and provide financial education. (To claim the $50 credit, at least $100 must be in the individual's account, except for the first year, when no minimum is necessary.)

THE TAX INCENTIVE LEVELS THE PLAYING FIELD OF WEALTH-BUILDING POLICY
S.922 would provide $1.2 billion over 10 years-a fraction of the $335 billion in asset-building policies that the federal government invests annually, the vast majority of which assists those with greater incomes.
The IDA tax credit has broad-based and bipartisan support including President George W. Bush who included funding for 900,000 IDAs in his 2006 budget. Senators Santorum (R-PA) and Lieberman (D-CT) are leading the effort in the Senate. There is a similar bipartisan effort in the House. H & R Block, Wal-Mart, Citigroup, and other financial services providers support the legislation.

See CFED Advocacy Center's Action Alerts for more information:
http://capwiz.com/idanetwork/home/

To send a letter to your Senator urging support of The Savings for Working Families Act of 2005 (S.922), click here:
http://capwiz.com/idanetwork/issues/alert/?alertid=7536526&type=CO

To send a letter to your Senator urging support of Family and Community Protection Act of 2005 (S.6), click here:
http://capwiz.com/idanetwork/issues/bills/?bill=6933716