ARC 0379D

ARC 0379D

HUMAN SERVICES DEPARTMENT[441]

Notice of Intended Action

Proposing rulemaking related to individual development
accounts and providing an opportunity for public comment

    The Department of Health and Human Services hereby proposes to adopt new Chapter 64, “Individual Development Account (IDA),” Iowa Administrative Code.

Legal Authority for Rulemaking

    This rulemaking is proposed under the authority provided in Iowa Code section 541A.5.

State or Federal Law Implemented

    This rulemaking implements, in whole or in part, Iowa Code section 541A.5.

Purpose and Summary

    The purpose of this proposed chapter is to outline the Department’s administration of the individual development account program outlined in Iowa Code chapter 541A. The program has not been funded since SFY 2016.

    This proposed chapter underwent a Red Tape Review pursuant to Executive Order 10. As a result of the review, the Department removed redundant or duplicative information and restrictive terms and added dates certain. The Department is concurrently proposing to rescind 421—Chapter 25 (ARC 0382D, IAB 6/24/26), which was the legacy Department of Human Rights chapter that corresponds to this new proposed chapter in agency [441].

Regulatory Analysis

    A Regulatory Analysis for this rulemaking was published in the Iowa Administrative Bulletin on May 13, 2026. A public hearing was held on the following date(s):

     ?   June 2, 2026

Fiscal Impact

    This rulemaking has no fiscal impact to the State of Iowa.

Jobs Impact

    After analysis and review of this rulemaking, no impact on jobs has been found.

Waivers

    Any person who believes that the application of the discretionary provisions of this rulemaking would result in hardship or injustice to that person may petition the Department for a waiver of the discretionary provisions, if any, pursuant to 441—Chapter 2504.

Public Comment

    Any interested person may submit written or oral comments concerning this proposed rulemaking, which must be received by the Department no later than 4:30 p.m. on July 14, 2026. Comments should be directed to:

Public Hearing

    Public hearings at which persons may present their views orally or in writing will be held as follows:

    Persons who wish to make oral comments at a public hearing may be asked to state their names for the record and to confine their remarks to the subject of this proposed rulemaking.

    Any persons who intend to attend a public hearing and have special requirements, such as those related to hearing or mobility impairments, should contact the Department and advise of specific needs.

Review by Administrative Rules Review Committee

    The Administrative Rules Review Committee, a bipartisan legislative committee which oversees rulemaking by executive branch agencies, may, on its own motion or on written request by any individual or group, review this rulemaking at its regular monthly meeting or at a special meeting. The Committee’s meetings are open to the public, and interested persons may be heard as provided in Iowa Code section 17A.8(6).

    The following rulemaking action is proposed:

    ITEM 1.  Adopt the following new 441—Chapter 64:

CHAPTER 64

INDIVIDUAL DEVELOPMENT ACCOUNT (IDA)

441—64.1(541A) Definitions. As used in these rules, unless the context otherwise requires:

    “Account holder” means the same as defined in Iowa Code section 541A.1.

    “Charitable contributor” means an individual, company or organization that makes a contribution through a nonprofit association described in Section 501(c)(3) of the Internal Revenue Code as amended to August 1, 2026, which association makes a deposit to an individual development account and which association is exempt from taxation under Section 501(a) of the Internal Revenue Code as amended to August 1, 2026.

    “Federal poverty level” means the poverty income guidelines established annually for a calendar year and published in the Federal Register by the U.S. Department of Health and Human Services.

    “Financial institution” means a financial institution, including but not limited to a bank, savings and loan, or credit union, approved by the department to accept individual development accounts.

    “Household” means the adults who are related by blood, marriage or adoption or who are unrelated but have maintained a stable family relationship together over a period of time and the individuals who are under 18 years of age related to the above adults by marriage, blood or adoption who are living together. “Living together” refers to domicile as evidenced by the parties’ intent to maintain a home for their family and does not include a temporary visit.

    “Individual contributor” means the same as defined in Iowa Code section 541A.1.

    “Individual development account” or “IDA” means an investment account that has the characteristics described in Iowa Code section 541A.2 and is operated by the operating organization.

    “Individual development account state match fund” means the fund established in the state treasury under the authority of the department into which are deposited funds for payment to operating organizations for state match payments to individual investment accounts and administrative costs to implement the individual investment account program.

    “Minor account holder” means an account holder who is younger than 18 years of age.

    “Operating organization” means an entity selected by the department for involvement in operating individual development accounts directed to the eligible target population.

    “Source of principal” means any of the following sources of a deposit:

    1.   Deposits made by the account holder.

    2.   Deposits of state match payments.

    3.   Deposits of individual development account moneys that are transferred from another individual development account holder. The moneys transferred from another individual development account will be considered to be a deposit of principal made by the account holder.

    4.   Deposits made on behalf of the account holder by an individual contributor or a charitable contributor.

441—64.2(541A) Establishment of individual development accounts. An investment account qualifies as an IDA when it is established and operates in accordance with the following.

    64.2(1) Operating organization. The investment account shall be established through an operating organization.

    64.2(2) Account. The account shall be opened at a financial institution and kept in the name of an individual account holder.

    64.2(3) Deposits. Deposits made to an IDA are also known as sources of principal and shall be made in any of the manners indicated in the definition of “source of principal” in rule 441—64.1(541A).

    64.2(4) Investment of funds. The funds deposited in the IDA may be invested in any investment that the financial institution is authorized to offer to the public.

    64.2(5) Income. The account earns income.

    64.2(6) Maximum deposits of principal. The total of all sources of principal in an individual development account may not exceed $30,000.

441—64.3(541A) Eligibility, state match payments, and state tax provisions.

    64.3(1) Eligibility based on countable household income level. Eligibility will be based on the prospective account holder’s household income for the calendar year preceding the calendar year in which the IDA will be opened. The household income shall not exceed 200 percent of the federal poverty level as published in the same year. If an account holder’s household income exceeds 200 percent of the federal poverty level in any subsequent year following the year that the account holder established the account, the account will remain open, but the account holder will not be eligible to receive the state savings match payment for deposits made during the year following the year when the household income exceeds 200 percent of the federal poverty level. If the prospective account holder files an income tax return on a fiscal year basis, the household income must nonetheless be computed on a calendar year basis.

    64.3(2) Countable household income.

    a.  The household’s countable income shall be the Iowa net income as defined in Iowa Code section 422.7, with the following inclusions and exclusions:

    (1)  Inclusions to the extent not already included in Iowa net income are as follows:

    1.  Capital gains.

    2.  Alimony.

    3.  Child support money.

    4.  Cash public assistance and relief, except property tax relief under Iowa Code chapter 425, subchapter II.

    5.  The gross payment amount of any pension or annuity, including but not limited to railroad retirement benefits.

    6.  Military retirement and veterans’ disability pensions.

    7.  Interest received from local, state or federal government securities.

    8.  Workers’ compensation.

    9.  The gross amount of disability income or “loss of time” insurance.

    (2)  Exclusions are as follows:

    1.  Gifts from nongovernmental sources.

    2.  Surplus foods, including food assistance.

    3.  Payments received by an individual under the age of 18 under the federal Social Security Act.

    4.  Other in-kind relief supplied by a governmental agency.

    b.  Income shall not be reduced by either a net operating loss carryover or by a capital loss carryover.

    64.3(3) Determination of income status and eligibility.

    a.  In lieu of calculating countable household income as provided in subrule 64.3(2) to determine income status and eligibility of an individual to hold an IDA, the operating organization may use evidence of an individual’s enrollment in a program with income eligibility restrictions that are equal to or less than the maximum household income provided in subrule 64.3(1) as sufficient for determining the individual’s eligibility to hold an IDA.

    b.  In order to determine the amount of countable household income of an individual seeking to open an IDA and to maintain household income records on an annual basis, the operating organization shall use any of the following methods or other methods deemed appropriate by the operating organization to obtain accurate income information:

    (1)  The operating organization shall ask both the individual who wishes to establish an IDA and other members of the individual’s household who have filed federal or state income tax returns to furnish a copy of the returns with attached W-2 statements and to sign a release of information form permitting the operating organization to receive from the Iowa department of revenue summary information indicating the Iowa net income or to receive a copy of the state income tax return for the specific calendar year used to establish income eligibility to participate in the IDA program and for specified successive calendar years during which the IDA account is open. The operating organization shall protect the confidentiality of this information.

    (2)  If the individual and members of the individual’s household have not filed federal or state income tax returns for the calendar year used to determine eligibility, the operating organization shall ask the individual to provide copies of available financial records of the household to determine the amount of countable income for the calendar year used to determine eligibility.

    (3)  The operating organization may also ask the individual seeking to hold an IDA to sign a release of information form allowing the operating organization to obtain individual and household income records held by agencies administering the programs referred to in paragraph 64.3(3)“a.” The operating organization shall use this information to verify and maintain household income records of individuals seeking to hold an IDA, thereby facilitating the administration of the IDA program. The operating organization shall maintain the confidentiality of this information. Countable household income determinations shall include the amount of the cash assistance provided through the programs referred to in paragraph 64.3(3)“a.”

    (4)  If the individual has minimal or no financial records and the operating organization determines that the totality of the individual’s circumstances corroborates a credible explanation for the absence of said records, the operating organization may accept a written self-declaration from the individual as sufficient to document initial income eligibility to hold an IDA.

    c.  The operating organization shall obtain and maintain income information records from an account holder and all members of the account holder’s family on a yearly basis to determine continued IDA eligibility.

    64.3(4) Exemption from income tax for income earned on assets in an IDA. Income earned on principal in an IDA will be exempt from state income tax even if the account holder’s household income is greater than 200 percent of the federal poverty level for the tax year.

    64.3(5) State match payments. The operating organization shall determine the account holder’s countable household income and account deposits on an annual basis for the purpose of computing the state match payment. The operating organization shall file with the department a claim for a state match payment on behalf of the account holder by April 30 of the year following the year in which the account holder made deposits into the IDA. The claim shall be filed on a form provided by the department. The department will make a payment of a savings match on a 1:1 ratio on amounts of up to $2,000 that an eligible account holder deposited in the account holder’s account the previous year. The total state savings match for all years shall not exceed $2,000 for any IDA. Neither the moneys transferred to an IDA from another IDA nor the state match received by the account holder pursuant to this subrule will be considered an account holder deposit for purposes of determining a state match payment. The department or operating organization shall make the state match payment directly to the IDA in the manner deemed appropriate by the department.

    64.3(6) Tax implications. IDAs shall be subject to rule 701—302.44(422,541A).

441—64.4(541A) Requests for proposals—operation of IDAs.

    64.4(1) Issuance of requests for proposals. The department may issue requests for proposals (RFPs) for operating organizations interested in operating an IDA program. The RFP will require the operating organization to provide information in its proposal regarding the financial institution that the operating organization will use for the proposed IDA program. The department will include such information in evaluating proposals submitted in response to the RFP.

    64.4(2) Review criteria used to evaluate and select proposals responding to the RFP. The department will evaluate and select proposals submitted by operating organizations in response to the RFP based upon but not limited to the criteria as provided in the RFP.

    64.4(3) Other considerations and guidelines. Other considerations and guidelines in implementing IDAs are:

    a.  The department shall have the authority to designate and limit the number of locations where IDA projects will be implemented, taking into account demographic characteristics and geographic considerations.

    b.  The department will require all IDA operating organizations and projects to comply with any federal individual development account program requirements for drawing federal funding.

    c.  The department and the operating organization shall enter into an agreement that specifies the responsibilities of both parties. The agreement will incorporate by reference the provisions of the RFP.

    d.  The operating organization shall maintain a clear and precise audit trail of all deposits and withdrawals of funds in IDAs. All withdrawals from an IDA shall require a signature of approval from the operating organization. Upon the termination of the agreement between the operating organization and the department or upon the discontinuance of the IDA program for any reason, the IDA accounts under the management of that operating organization shall terminate and the funds in the IDAs shall be distributed to the account holders unless the operating organization and a successor operating organization located in the same geographic area and operating an IDA program approved by the department enter into an agreement for the transfer of IDA accounts to the successor operating organization. The department shall have authority to review and approve in advance the agreement between the two operating organizations.

    e.  Upon the termination of an operating organization’s relationship with the financial institution holding its IDA accounts, the operating organization managing the accounts shall enter into an agreement with a department-approved successor financial institution to hold the accounts and shall arrange for the transfer of the accounts to the new financial institution. The new agreement shall be subject to the department’s review and advance approval.

    f.  If an account holder moves within the state to a location that is not served by the operating organization but is served by another operating organization with a department-approved IDA program, the original operating organization shall arrange for the transfer of the account to a financial institution that has an agreement with the operating organization in the new location. If there is no operating organization in the new location, the IDA account shall be closed, with funds in the account distributed to the account holder; alternatively, the operating organization and the account holder may jointly agree to maintain the account under the management of the existing operating organization and financial institution. The operating organization shall provide a written notification to the department of all transfers of IDA accounts to the management of a new operating organization.

441—64.5(541A) Authorized withdrawals of principal and income.

    64.5(1) Approved purposes for withdrawal of funds from an IDA. An account holder may withdraw principal and income earned on principal from an IDA only with the written approval of the operating organization and only for the purposes outlined in Iowa Code section 541A.2(4).

    64.5(2) Conditions on withdrawals of principal and income. An account holder may withdraw funds from the account holder’s IDA subject to the following conditions:

    a.  Any amount of principal and income earned on principal, provided the sum is authorized under Iowa Code section 541A.2(4) and in accordance with the procedure for authorized withdrawals set forth under subrule 64.5(3).

    b.  If the account holder is 59½ years of age or older, any amount of principal and income earned on principal. Such withdrawals shall not require the approval of the operating organization.

    64.5(3) Procedures for account holder deposits and withdrawals. The operating organization and the financial institution shall agree upon and provide to account holders procedures to facilitate authorized withdrawals.

441—64.6(541A) Notice of nonapproved withdrawals and closure of the account.

    64.6(1) Nonapproved withdrawals and attempted withdrawals for nonapproved purposes. The financial institution shall notify the operating organization within five calendar days of any withdrawals or attempted withdrawals that appear to be nonapproved. The financial institution shall refuse to release any funds that do not have the written authorization of approval from the operating organization.

    64.6(2) Closure of an IDA by the operating organization. The operating organization may close an IDA pursuant to Iowa Code section 541A.2(6).

441—64.7(541A) Transfers of assets of an IDA.

    64.7(1) Transfers by an adult account holder. An adult account holder may transfer all or part of the assets in the adult account holder’s IDA to any other account holder’s IDA. Upon compliance by the operating organization and financial institution with the requirements of rule 441—64.5(541A), IDA account holders who have transferred funds into another individual’s IDA account and any beneficiaries of the transferee’s IDA account shall sign a waiver of liability form releasing the operating organization and the financial institution from civil liability and responsibility for the wrongful withdrawals of funds by the account holder due to the account holder’s false representation of the purpose of the withdrawal, resulting in the loss to the account balance of deposited principal funds, including individual and charitable contributions, transferred funds, and the state match payments.

    64.7(2) No transfers of assets from a minor account holder’s IDA. Neither a minor account holder nor the parents or legal guardian of such minor account holder shall have the right or ability to transfer assets from the minor account holder’s IDA to the IDA of any other account holder.

    64.7(3) Transfers when an account holder dies. At the time an IDA is established, an account holder shall name a contingent beneficiary or contingent beneficiaries or an account holder transferee to whom the assets of the account holder’s IDA shall be transferred upon the account holder’s death. Upon the account holder’s death, the account assets shall be transferred to the named contingent beneficiary or contingent beneficiaries or to the account holder transferee’s IDA, as applicable. A named contingent beneficiary or contingent beneficiaries or account holder transferee may be changed at the discretion of the account holder. If the named contingent beneficiary or contingent beneficiaries or account holder transferee is deceased or otherwise does not accept the transfer, the assets of the deceased account holder’s IDA shall be transferred to the IDA state match fund.

These rules are intended to implement Iowa Code chapter 541A.