PETITION OF:

SECTION 1. Section 2 of Chapter 18 of the General Laws, as appearing in the 1998 Official Edition and as amended is hereby further amended by adding after subsection (D) a new subsection (E):—

(E). Individual Development Accounts

(a) Definitions. For purposes of this section, the following terms shall mean:

“Account holder,” any individual who meets the income eligibility requirements for the TAFDC, STAFDC and EAEDC programs as described in this chapter, and who is the owner of an individual development account;

“Department,” the Department of Transitional Assistance, which shall administer the program for the Commonwealth of Massachusetts;

“Director,” the director of the Department of Transitional Assistance;

“Individual development account,” a financial instrument established pursuant to subsection C of this section;

“Individual development account reserve fund,” the fund created by the Department of Transitional Assistance for the purposes of funding the costs incurred in the administration of this program and for providing matching funds for savings in individual development accounts to be used for approved uses: “Financial institution,” any bank, trust company, savings bank, credit union or savings and loan association reserve fund that is not the account holder.

“Program,” the individual development account program establish in subsections A through E of this section;

(b) There is hereby established within the department a program to be known as the “Individual Development Account Program.” The program shall provide eligible families and individuals with an opportunity to establish special savings accounts, which may be used for educational programs, job training, home ownership, repair or improvement of a home, or small business capitalization. The department shall promulgate rules and regulations to implement and administer the provisions of subsections A through E of this section.

(c) A family or individual eligible for temporary assistance under this chapter may open an individual development account for the purpose of accumulating and withdrawing moneys for specified expenditures. The account holder may withdraw moneys from the account for any of the following expenditures, according to an agreement with the department:

(i) Educational costs for any family member eighteen years of age or older;

(ii) Job training costs for any family member eighteen years of age or older, at an accredited or licensed training program;

(iii) Purchase of primary residence;

(iv) Capitalization of a small business for any family member eighteen years of age or older.

(d) Financial institutions approved by the department shall be permitted to establish individual development accounts for participants, pursuant to subsections A through E of this section, with approval from the department. The department shall certify that such accounts have been established pursuant to the provisions of subsections A through E of this section and that deposits have been made by or on behalf of the account holder.

(e) A financial institution establishing an individual development account shall;

(i) Keep the account in the name of the account holder;

(ii) Permit deposits to be made in the account by the account holder;

(iii) Require the account to earn at least market rate of interest; and

(iv) Permit the account holder to withdraw moneys from the account, unless otherwise notified by the department.

(f) The department shall deposit into the account of each account holder monies equal to deposits made by the account holder, up to $500 per year for each year that the account holder maintains the account. The total of all deposits into an individual development account in one calendar year shall not exceed ten thousand dollars, including matching funds. The total balance in an individual development account shall not exceed fifty thousand dollars in a lifetime.

If moneys are withdrawn during a calendar year from an individual development account by an account holder in a manner other than that provided in subsection (E)(c)(i) through (iv) of this section, all matching moneys for those deposits shall be forfeited.

All matching funds forfeited by an account holder by withdrawal from the program shall be returned to the individual development account reserve fund of the department.

In the event of an account holder’s death, the account may be transferred to the ownership of a contingent beneficiary. An account holder shall name contingent beneficiaries at the time the account is established and may change such beneficiaries at any time. If the named beneficiary is deceased or otherwise cannot accept the transfer, the moneys shall be transferred to the individual account reserve fund of the department.

(g) The money deposited into the account holder’s account shall not be considered either income or assets for the purpose of determining a recipient’s eligibility for or grant amount from the TANF program. The account holder shall not be penalized financially or have his or her grant reduced or eliminated regardless of the balance in his or her account.

(h) Monies deposited in or withdrawn pursuant to subsection (E)(c)(i) through (iv) of this section from an individual development account by an account holder are exempt from state taxation pursuant to chapter 62 of the Massachusetts General Laws.

(i) Interest earned by an individual development account is exempted from state taxation.

(j) The commonwealth shall appropriate funds equal to one million dollars per year for match and program administration funds.