Asset Development Strategies

1. Asset Development Strategies Asset Development Webinar Series – Part II February 19, 2009

2. Objectives • Review the meaning and importance of Asset Development • Learn about different strategies persons with disabilities can use to save and build assets. • Learn about the importance of connecting persons with disabilities to the Work Incentives Planning and Assistance Project (WIPA) when considering asset building. • The DPN’s Role – how the DPN can support Asset Building Strategies for Individuals with Disabilities

3. Earned Income Tax Credit (EITC) and ability for split refunds Volunteer Income Tax Assistance (VITA) sites Real Economic Impact (REI) Tour Strategies for Supplemental Security Income (SSI) Recipients Plan for Achieving Self-Support (PASS) Individual Development Accounts (IDAs) Home Ownership Micro Enterprise Continuing Education Objectives

4. Asset Development is a series of strategies that has the potential to: help people with disabilities improve their economic status, expand opportunities for community participation, and positively impact the quality of life experience. Examples of Assets: Money you have in the bank Cash on hand Securities (shares) (retirement accounts, other investments) Property you own Owner equity in a home or business Education level and work experience Quick Review – Asset Development, What is it and Why is it important?

5. Asset Building Strategies • The Earned Income Tax Credit (EITC) • Volunteer Income Tax Assistance (VITA) Locations • The Real Economic Impact (REI) Tour

6. Strategies for Saving and Building Assets Earned Income Tax Credit (EITC)

7. Strategies for Saving and Building Assets: Earned Income Tax Credit (EITC) • The EITC is a refundable credit. What this means is that if you qualify based on your income, even when you have no tax liability, you will receive a tax refund. • You must file your taxes to receive this refund, even if you do not have any tax liability. • If you are filing for the EITC for the first time, you may file to claim the credit for a three-year period. • You may claim the EITC for the 2008 year as well as the 2007 and 2006 year.

8. Strategies for Saving and Building Assets: Earned Income Tax Credit (EITC) • The money received as a result of the EITC can be used to build assets…By saving the money, or part of the money received as a result of the EITC, one can begin to build assets. • For example, the money received as a result of the EITC could be used to establish a relationship with a financial institution (e.g. Opening a Savings or Checking Account). • Persons now have the ability to split the refund they receive in up to three different accounts making saving the money easier than ever • Checking, • Savings, and/or • Money Market Account.

9. Strategies for Saving and Building Assets: Earned Income Tax Credit (EITC) - CASE EXAMPLE • Mary Williams is not married and has no children. She is 35 years old. She worked part-time in 2006, 2007 and 2008. Mary currently receives SSI benefits. • For the last three years, Mary earned $5,000. • Mary’s earning would entitle her to approximately a $390 tax refund by claiming the EITC. • Mary did not file taxes the last two years because she had no tax liability. • Since the EITC can be claimed retroactively, Mary can now submit a tax return to the IRS for the last three years and be entitled to a refund of over $900.

10. Strategies for Saving and Building Assets: Earned Income Tax Credit (EITC) - CASE EXAMPLE, cont. • If you were Mary, getting a check for $900 is a lot of money. There are decisions to be made. • You can direct a portion of your tax refund to be deposited directly into your savings account. • The split refund makes it easier to save a part of your EITC refund. A new Form 8888 submitted with your tax return allows the filer to provide the name of the financial institution and the individual account and routing numbers.

11. Strategies for Saving and Building Assets: Earned Income Tax Credit (EITC) • EITC is an important tool to increase assets. • With the spilt refund option, one can immediately choose to put a part of one’s refund in a savings account and begin to earn more money toward a specific asset-building goal.

12. Strategies for Saving and Building Assets Volunteer Income Tax Assistance (VITA)

13. Strategies for Saving and Building Assets: VITA Locations • The IRS is working with diverse community partners to establish Volunteer Income Tax Assistance (VITA) Sites to help prepare tax returns and help people claim the EITC. • By offering these services free of charge it provides the opportunity for persons to file their taxes and take advantage of the Earned Income Tax Credit at no cost to them thus allowing them to save all of the money they receive from the EITC.

14. Strategies for Saving and Building Assets Real Economic Impact (REI) Tour

15. Strategies for Saving and Building Assets: The Real Economic Impact (REI) Tour • The IRS is reaching out to the disability community through local, state, and national partnerships. • In cooperation with the National Disability Institute (NDI), the Real Economic Impact (REI) Tour was established to reach low-income taxpayers with disabilities. • Through outreach and education the REI Tour is helping to educate the disability community about the EITC as a mechanism to save and build assets.

16. Asset Building Strategies • Individual Development Account(s) (IDAs) • Home Ownership • Micro Enterprise • Continuing Education

17. Strategies for Saving and Building Assets: Individual Development Accounts (IDAs) • Individual Development Accounts or IDAs are matched savings accounts designed to help low income workers plan for and reach specific asset building goals. • Nationwide, there are over 30,000 individuals who are saving money each month as part of an IDA with over 1,000 IDA providers.

18. Strategies for Saving and Building Assets: Individual Development Accounts (IDAs) • Savings Agreement • An eligible individual who is working signs a savings agreement with an IDA provider to establish a specifiedasset goal and how much income will be put in a special savings account for a specific purpose.

19. Strategies for Saving and Building Assets: Individual Development Accounts (IDAs) • The Savings Agreement: • Identifies the Asset Objective • Sets a goal of the total amount to be saved and matched • Sets a savings/investment schedule of the specific amount to be deposited at regular intervals • Agreement reached with the Program Manager on a match rate

20. Strategies for Saving and Building Assets: Individual Development Accounts (IDAs) • Federally supported IDA programs offer low-income workers three choices for asset goals: • Buy a Home • Start a Business • Continue higher education

21. Strategies for Saving and Building Assets: Individual Development Accounts (IDAs) • In addition to setting an asset goal and a plan for saving to meet the goal, the IDA has two other core program elements: • There is a match the IDA program provider will offer for each dollar saved in the account. • Each participant will also be required to participate in financial education classes.

22. Strategies for Saving and Building Assets: Individual Development Accounts (IDAs) • Matched Savings • In IDA programs nationwide, the match may range from one to four dollars. • The maximum federal contribution to an IDA account is $2,000 and must be deposited with an equal amount of nonfederal dollars for a minimum of $4,000.

23. Strategies for Saving and Building Assets: Individual Development Accounts (IDAs) – Case Example • Susan has set an asset goal to start a business. Susan enters into a savings agreement with the IDA provider to save $50 per month for two years. • The IDA provider indicates that the program will match her contribution with four dollars for every dollar she saves and places in the designated account. • At the end of two years, Susan has contributed $1,200 to her IDA. The IDA program will match her savings with $4,800. • Through the IDA program, Susan has been able to save $6,000 to start her business.

24. Strategies for Saving and Building Assets: Individual Development Accounts (IDAs) • All IDA savings plans must be accomplished within five years. • Many IDA participants leverage other public and private funding sources to meet their ultimate asset goal. • For example, if the asset goal was to purchase a home and the savings plan was $50 per month for five years and was matched four to one, the individuals would have $15,000. This IDA was further enhanced by a state’s first time homebuyer assistance to make it possible to purchase a home.

25. Strategies for Saving and Building Assets: Individual Development Accounts (IDAs) • Financial Education • In IDA programs, there are federal requirements that participants enroll in financial education classes. • Most projects require at least 12.5 hours of training before a proposed asset can be purchased.

26. Strategies for Saving and Building Assets: Individual Development Accounts (IDAs) IDA Program Eligibility • Eligibility is based on a maximum household level of income and often relies on the federal poverty level as a guideline. • Typical eligibility is 100 to 200 percent of the federal poverty level. Household net worth must be less than $10,000, excluding value of car or home. • Individuals with disabilities who are working part- or full-time and are eligible for EITC would also be eligible for an IDA. • Minimum age requirements will vary by IDA program provider.

27. Strategies for Saving and Building Assets: Individual Development Accounts (IDAs) Impact on Other Public Benefits • Federally funded IDAs are exempt from counting as an asset for the purposes of remaining eligible for SSI and Medicaid. • An IDA with savings plans could actually help preserve eligibility for Social Security benefits.

28. Strategies for Saving and Building Assets: Individual Development Accounts (IDAs) • To locate an IDA Provider in your state please visit the IDA Online Directory at: http://www.cfed.org/ida/directory/ • The list contained here may not include every IDA provider but this list is a good place to start.

29. Strategies for Saving and Building Assets Work Incentives Planning and Assistance (WIPA) Projects

30. Asset Building Strategies and the Work Incentives Planning and Assistance (WIPA)Project • The importance of connecting people with disabilities who want to build assets to the WIPA project • Possible Impact of Asset Accumulation on Public Benefits • Use of Work Incentives as an Apparatus to Save and Build Assets

31. Asset Building Strategies and the Work Incentives Planning and Assistance Project (WIPA) • As always, it is not the job of the DPN to know all of specifics when it comes to social security benefits. • However, every DPN should know that anyone who is receiving social security benefits and is thinking about changing their financial situation (i.e. by going back to work) should be connected to a Community Work Incentive Coordinator (CWIC) through the local WIPA program… • The same rule applies when it comes to those who are receiving benefits and who want to begin to save and build assets.

32. Asset Building Strategies and the Work Incentives Planning and Assistance Project (WIPA) • ANYONEwho is currently receiving social security benefits and WORKING who wants to save and build assets should be directed to a CWIC in order for the person to gain a complete understanding of how and what may affect those benefits.

33. Asset Building Strategies and the Work Incentives Planning and Assistance Project (WIPA) • In addition to learning about how saving and building assets may or may not affect their benefits, the beneficiary may learn about other valuable work incentives that can assist them in saving and building assets. • For example, the Plan for Achieving Self Support (PASS) or Property Essential to Self Support (PESS).

34. A PASS plan allows an SSI beneficiary to set aside income to reach a specific work-related goal. Resources and income set aside in a PASS plan is excluded from any determination of continued eligibility for SSI based on income or assets A PASS plan not only helps a beneficiary save income for work related goals but, also it can help individuals maintain or increase their SSI benefit by excluding income/resources in the PASS plan. As SSI recipients produce more income, the amount of their monthly SSI cash payment is reduced. With a PASS plan, the amount of income set aside in the plan will not be counted for determining an individual’s SSI level of cash benefit. Nationally, there are only 1,500 SSI participants with an approved PASS plan The PASS is an underutilized resource that can assist SSI beneficiaries with saving and building assets. Asset Building Strategies and the Work Incentives Planning and Assistance Project (WIPA): PASS

35. Asset Building Strategies and the Work Incentives Planning and Assistance Project (WIPA): PESS • Under this work incentive, property essential to self-support (PESS) is excluded as a resource. • With a resource limit of $2,000 for an individual to remain eligible for SSI, PESS becomes an important strategy that can help advance a beneficiary’s self-sufficiency. • Property a beneficiary owns and uses in a business such as a farm, a gas station, or a beauty parlor, • Personal property that a beneficiary uses for work, such as tools, uniforms or safety equipment and/or • Property a beneficiary uses to produce goods or services may be viable means for a PESS plan.

36. Asset Building Strategies and the Work Incentives Planning and Assistance Project (WIPA): PESS • SSI will not count up to $6,000 of equity value of non business income producing property if the property yields an annual rate of return of at least 6%. • Case Example: Sharon owns a loom to make rugs. • The equipment is valued at $7,000. • Her equity is $5,000 since she still owes $2,000 on the loom. • Her net earnings from self-employment are $400. • Sharon’s equity is under the $6,000 limit for property essential to self-support and her income ($400) is greater than 6% of her equity, then her income producing property is excluded from countable resources).

37. Asset Building Strategies and the Work Incentives Planning and Assistance Project (WIPA) The Bottom Line: • It is essential to connect Social Security Beneficiaries, who are interested in saving and building assets, to a Community Work Incentive Coordinator (CWIC).

38. Disability Program Navigators • What is your role as a DPN? • Resource • Facilitator

39. The Navigator’s Role… • As a Navigator, part of your role is to be a resource. • Asset Development is a crucial piece of economic self-sufficiency and greater community participation and choice. • In addition to understanding what Asset Development is, it is essential that the Navigator is familiar with some of the Asset Development Strategies so the Navigator can serve as an educator in the community.

40. The Navigator’s Role… • As a Navigator, part of your role is to be a resource. • By familiarizing yourself with different Asset Development strategies and educating the community about these possibilities, the Navigator may create opportunities for new partnerships and economic advancement of people with disabilities in the community.

41. The Navigator’s Role… • The Navigator can work with a local EITC coalition to spread the word about the EITC • If there is not an EITC Coalition then find other ways to get the word out about the EITC and VITA locations. • Radio and Newspaper PSAs • Disability Listservs • Partner Meetings

42. The Navigator’s Role… • Where applicable, the Navigator can get involved with the REI Tour • The Navigator can reach out to the WIPA and learn how the WIPA and Navigator can work together to promote saving and asset accumulation through work incentives and other asset development strategies. • The Navigator can educate the One-Stop Career Center system about IDAs and create and disseminate a list of local IDA providers.

43. The Navigator’s Role… • The Navigator can also serve as a conduit for facilitating financial education. • The FDIC’s Money Smart Financial Literacy Program offers a “Train the Trainer” workshop which many DPNs have been successful in coordinating. To learn more about the Money Smart “Train the Trainer” program please visit the following website: http://www.fdic.gov/consumers/consumer/moneysmart/trainthetrainer.html

44. Assets and Asset Development Strategies • So, today we learned…

45. The importance of Asset Development Strategies for people with disabilities. How the Earned Income Tax Credit (EITC), Volunteer Income Tax Assistance (VITA) Sites, can be used in combination as part of a larger plan to acquire assets. About Individual Development Accounts and how they help people save and build Assets The importance of connecting SSA beneficiaries to WIPA projects to learn about saving and building assets and work incentives that can help people save and build assets. The Navigator’s role in helping to educate the One-Stop Career system on asset building strategies. Review

46. Contact Information DJ Diamond ddiamond@ndi-inc.org 740-398-5247 Michael Roush mroush@Ndi-inc.org Elizabeth Jennings ejennings@ndi-inc.org