Transcript Asset Development Strategies

Asset Development Strategies
Asset Development
Webinar Series – Part II
February 19, 2009
Objectives
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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
Objectives
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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
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Plan for Achieving SelfSupport (PASS)
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Individual Development
Accounts (IDAs)
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Home Ownership
Micro Enterprise
Continuing Education
Quick Review – Asset Development,
What is it and Why is it important?
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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.
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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
Asset Building Strategies
 The
Earned Income Tax Credit (EITC)
 Volunteer Income Tax Assistance
(VITA) Locations
 The Real Economic Impact (REI) Tour
Strategies for Saving
and Building Assets
Earned Income Tax Credit (EITC)
Strategies for Saving and Building Assets:
Earned Income Tax Credit (EITC)
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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.
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You may claim the EITC for the 2008 year as well as the
2007 and 2006 year.
Strategies for Saving and Building Assets:
Earned Income Tax Credit (EITC)
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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.
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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
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Checking,
Savings, and/or
Money Market Account.
Strategies for Saving and Building Assets: Earned
Income Tax Credit (EITC) - CASE EXAMPLE
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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.
Strategies for Saving and Building Assets: Earned
Income Tax Credit (EITC) - CASE EXAMPLE, cont.
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If you were Mary, getting a check for $900 is
a lot of money. There are decisions to be
made.
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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.
Strategies for Saving and Building Assets:
Earned Income Tax Credit (EITC)
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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 assetbuilding goal.
Strategies for Saving
and Building Assets
Volunteer Income Tax Assistance (VITA)
Strategies for Saving and Building
Assets: VITA Locations
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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.
Strategies for Saving
and Building Assets
Real Economic Impact (REI) Tour
Strategies for Saving and Building Assets:
The Real Economic Impact (REI) Tour
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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.
Asset Building Strategies
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Individual Development Account(s) (IDAs)
 Home Ownership
 Micro Enterprise
 Continuing Education
Strategies for Saving and Building Assets:
Individual Development Accounts (IDAs)
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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.
Strategies for Saving and Building Assets:
Individual Development Accounts (IDAs)
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Savings Agreement
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An eligible individual who is working signs a
savings agreement with an IDA provider to
establish a specified asset goal and how much
income will be put in a special savings account for
a specific purpose.
Strategies for Saving and Building Assets:
Individual Development Accounts (IDAs)
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The Savings Agreement:
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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
Strategies for Saving and Building Assets:
Individual Development Accounts (IDAs)
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Federally supported IDA programs offer lowincome workers three choices for asset
goals:
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Buy a Home
Start a Business
Continue higher education
Strategies for Saving and Building Assets:
Individual Development Accounts (IDAs)
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In addition to setting an asset goal and a
plan for saving to meet the goal, the IDA has
two other core program elements:
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2.
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.
Strategies for Saving and Building Assets:
Individual Development Accounts (IDAs)
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Matched Savings
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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.
Strategies for Saving and Building Assets:
Individual Development Accounts (IDAs) –
Case Example
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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.
Strategies for Saving and Building Assets:
Individual Development Accounts (IDAs)
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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.
Strategies for Saving and Building Assets:
Individual Development Accounts (IDAs)
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Financial Education
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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.
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.
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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.
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.
Strategies for Saving and Building Assets:
Individual Development Accounts (IDAs)
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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.
Strategies for Saving
and Building Assets
Work Incentives Planning and
Assistance (WIPA) Projects
Asset Building Strategies and the Work Incentives
Planning and Assistance (WIPA) Project
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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
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Asset Building Strategies and the Work Incentives
Planning and Assistance Project (WIPA)
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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.
Asset Building Strategies and the Work Incentives
Planning and Assistance Project (WIPA)
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ANYONE who 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.
Asset Building Strategies and the Work Incentives
Planning and Assistance Project (WIPA)
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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).
Asset Building Strategies and the Work Incentives
Planning and Assistance Project (WIPA): PASS
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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.
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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): PESS
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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.
Asset Building Strategies and the Work Incentives
Planning and Assistance Project (WIPA): PESS
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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.
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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).
Asset Building Strategies and the Work Incentives
Planning and Assistance Project (WIPA)
The Bottom Line:
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It is essential to connect Social Security
Beneficiaries, who are interested in saving
and building assets, to a Community Work
Incentive Coordinator (CWIC).
Disability Program Navigators
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What is your role as a DPN?
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Resource
Facilitator
The Navigator’s Role…
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As a Navigator, part of your role is to be a
resource.
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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.
The Navigator’s Role…
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As a Navigator, part of your role is to be a
resource.
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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.
The Navigator’s Role…
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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.
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Radio and Newspaper PSAs
Disability Listservs
Partner Meetings
The Navigator’s Role…
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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.
The Navigator’s Role…
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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/moneysma
rt/trainthetrainer.html
Assets and Asset Development
Strategies
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So, today we learned…
Review
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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
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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 OneStop Career system on
asset building strategies.
Contact Information
DJ Diamond
[email protected]
740-398-5247
Michael Roush
[email protected]
Elizabeth Jennings
[email protected]