A financial instrument known as an individual development account is established. An individual development account shall have all of the following characteristics:
1. The account is kept in the name of an individual account holder.
2. Deposits made to an individual development account shall be made in any of the following manners and are subject to the indicated conditions:
a. Deposits made by the account holder.
b. Deposits of a savings refund authorized under section 541A.3, subsection 1, due the account holder because of the account holder's deposits in the account holder's account.
c. Deposits of individual development account moneys which are transferred from another individual account holder.
d. A deposit made on behalf of the account holder by an individual or a charitable contributor. This type of deposit may include but is not limited to moneys to match the account holder's deposits. A deposit made under this paragraph shall be held in trust for the account holder and shall only be used to earn income in the account or to be withdrawn by the account holder for a purpose provided in subsection 4.
3. The account earns income.
4. During a calendar year, an account holder may withdraw without penalty from the account holder's account the sum of the following:
a. With the approval of the operating organization, amounts withdrawn for any of the following approved purposes:
(1) Educational costs at an accredited institution of higher education.
(2) Training costs for an accredited or licensed training program.
(3) Purchase of a primary residence.
(4) Capitalization of a small business start-up. P MARGINS L Amounts withdrawn for purposes of this paragraph shall be charged to the source of principal on a prorated basis. Moneys transferred from another individual development account shall be considered to be a deposit made by the account holder for purposes of charges to the source of principal.
b. At the adult account holder's discretion any income earned by the account. An account holder who is ten or more but less than eighteen years of age may withdraw any income earned by the account with the approval of the account holder's parent or guardian and of the operating organization. If the account holder is less than ten years of age, any income earned by the account may be withdrawn by the account holder's parent or guardian with the approval of the operating organization.
c. At the account holder's discretion, if the account holder is at least fifty-nine and one-half years of age, any amount.
5. If an account holder is less than eighteen years of age, moneys shall not be withdrawn from the holder's account unless the withdrawal is authorized under subsection 4. If an account holder is eighteen or more years of age, any amount of the adjusted account holder deposits withdrawn during a calendar year which is not authorized under subsection 4, is subject to a penalty of fifteen percent. In addition, if at any time the cumulative amount withdrawn by the account holder over the life of the account that is not authorized under subsection 4 exceeds fifty percent of the amount of the adjusted account holder deposits, the contributions made by a charitable or individual contributor held in trust in the account holder's account shall be removed from the account and redeposited in another individual development account or the reserve pool as directed by the contributor and deposits made by the state of a savings refund authorized under section 541A.3, subsection 1, shall be withdrawn and deposited in the reserve pool. The amount of the adjusted account holder deposits is the amount remaining after subtracting from the cumulative moneys deposited by the account holder all amounts withdrawn pursuant to subsection 4, paragraph "a". At the time a charitable or individual contributor contributes moneys to an account the contributor shall indicate the contributor's directions for disposition of moneys which are removed. If the designated choice of the contributor does not exist the contributed moneys shall be withdrawn and deposited in the reserve pool.
6. Penalty amounts collected pursuant to subsection 5 shall be deposited in the reserve pool.
7. An adult account holder may transfer all or part of the assets the adult account holder has deposited in the account to any other account holder's account. However, an account holder who is less than eighteen years of age is prohibited from transferring account assets to any other account holder. Moneys contributed by a charitable or individual contributor are not subject to transfer except as authorized by the contributor. Amounts transferred in accordance with this subsection are not subject to a penalty.
8. If approved by the federal government, moneys in an individual development account and any earnings on the moneys shall not be considered by the department of human services for determining the eligibility of an individual under the family investment program under chapter 239 or the JOBS program under chapter 249C.
9. In the event of an account holder's death, the account may be transferred to the ownership of a contingent beneficiary or to the individual development account of another account holder. An account holder shall name contingent beneficiaries or transferees at the time the account is established and a named beneficiary or transferee may be changed at the discretion of the account holder. If the named beneficiary or transferee is deceased or otherwise cannot accept the transfer, the moneys shall be transferred to the reserve pool.
10. The total amount of sources of principal which may be in an individual development account shall be limited to fifty thousand dollars.
93 Acts, ch 97, §17
Referred to in § 422.7, 541A.1, 541A.4
Iowa General Assembly
Search: Iowa Code 1995
© 1996 Cornell College and League of Women Voters of Iowa
Comments? webmaster@legis.iowa.gov.
Last update: Thu Feb 8 18:14:51 CST 1996
URL: /IACODE/1995/541A/2.html
jhf