TITLE 2 PUBLIC FINANCE
CHAPTER 79 INDIVIDUAL
DEVELOPMENT ACCOUNTS
PART 1 GENERAL
PROVISIONS
2.79.1.1 ISSUING
AGENCY: New Mexico Department of Finance and
Administration, Local Government Division.
[2.79.1.1 NMAC - N,
04/29/2005]
2.79.1.2 SCOPE: All individual
development account program administrators funded pursuant to the Act, state
agencies and other stakeholders affected by the rule. The scope of these rules includes, but is not
limited to:
A. policies concerning the eligible
uses for and establishment of individual development accounts;
B. selection criteria and requirements
for participating individual development account program administrators; and
C. eligibility criteria for individual
account owners.
[2.79.1.2 NMAC - N,
04/29/2005]
2.79.1.3 STATUTORY
AUTHORITY: The Individual Development Account Act,
Section 58-30-5, NMSA 1978 and Section 9-6-5 Subsection E, NMSA 1978.
[2.79.1.3 NMAC - N,
04/29/2005]
2.79.1.4 DURATION: Permanent.
[2.79.1.4 NMAC - N,
04/29/2005]
2.79.1.5 EFFECTIVE
DATE: 04/29/2005 unless a later date is cited at the
end of a section.
[2.79.1.5 NMAC - N,
04/29/2005]
2.79.1.6 OBJECTIVE: The Individual
Development Account Act (Sections 58-30-1 through 58-30-12 NMSA 1978; being
Laws 2003, Chapter 362) established a structure to provide oversight to
individual development account programs in New Mexico funded through the
act. These rules are designed to:
A. identify and promote quality
individual development account initiatives throughout the state while
encouraging innovation and diversity;
B. ensure accountability of account
owners, account programs, program administrators as well as other stakeholders;
and
C. provide standards of eligibility and
program administration for individual development account programs in New
Mexico.
[2.79.1.6 NMAC - N,
04/29/2005]
2.79.1.7 DEFINITIONS:
A. "Account owner" means the person in whose name an individual
development account is originally established.
B. "Act" means the Individual Development Account Act,
Sections 58-30-1 through 58-30-12 NMSA 1978.
C. "Allowable use" means
monies expended from an individual development account for the account owner or
the account owner’s spouse or dependents for a use listed below:
(1) expenses to attend an
approved post-secondary or vocational educational institution, including, but
not limited to, payment for tuition, books, supplies and equipment required for
courses;
(2) costs to acquire or
construct a principal residence that is the first principal residence acquired
or constructed by the account owner;
(3) costs of major home
improvements or repairs on the principal residence of the account owner;
(4) capitalization or
costs to start or expand a business including equipment, tangible personal
property, operational and inventory expenses, legal and accounting fees and
other costs normally associated with starting or expanding a business;
(5) acquisition of a
vehicle necessary to obtain or maintain employment by an account owner or the
spouse of an account owner, and
(6) in the case of a
deceased account owner, amounts deposited by the account owner and held in an
individual development account shall be distributed to a beneficiary if not in
conflict with the New Mexico Uniform Probate Code Sections 45-1-101 through
45-1-404, NMSA 1978. If the beneficiary
is eligible to maintain the account, according to the provisions of the act and
these rules, then the account as well as matching funds designated for that
account from the program reserve fund of the program administrator may be
transferred and maintained in the name of the surviving spouse, dependent or
beneficiary.
D. "Authorized financial institution"
means a financial institution authorized by the division to hold and manage
individual development accounts and reserve accounts.
E. "Business" means a
sole proprietorship, business venture or corporate structure in which the
account owner will be an owner of greater than 50 percent.
F. "Director" means the
director of the division.
G. "Division" means the
local government division of the New Mexico department of finance and
administration.
H. "Earned income" means
wages from employment, payment in lieu of wages, disability payments, tribal
distributions or earnings from self-employment or acquired from the provision
of services, goods or property, production of goods, management of property or
supervision of services.
I. "Education" means a
job training or related educational program approved by the program
administrator and the division.
J. "Eligible individual"
means a person who meets the criteria for opening an individual development
account.
K. "Emergency withdrawal"
means a withdrawal by an account owner that:
(1) is a withdrawal of
only those funds, or a portion of those funds, deposited by the account owner
in the individual development account of the account owner;
(2) is permitted by a program
administrator on a case-by-case basis; and
(3) is made due to a
personal crisis, including but not limited to illness, eviction, potential
foreclosure, job loss or urgent family reasons and approved in writing by a program
administrator.
L. "Financial institution"
means a bank, bank and trust, savings bank, savings association or credit union
authorized to be a trustee of individual retirement accounts as defined by
federal law, the deposits of which are insured by the federal deposit insurance
corporation or the national credit union administration.
M. "Financial literacy"
means a basic understanding of budgets and savings accounts, credit and
interest and how to use financial services including, but not limited to having
a savings plan to reach the account owner's savings goal for an individual
development account.
N. "First principal residence"
means a principal residence to be acquired or constructed by an account owner
who has no ownership interest in a principal residence during the three-year
period ending on the date of acquisition of the principal residence.
O. "Individual development
account" means an account established and maintained in an authorized
financial institution by an eligible individual participating in an individual
development account program pursuant to the act.
P. "Individual
development account program" means a program established by a program
administrator approved by the division to establish and administer individual
development accounts and reserve accounts for eligible individuals and to
provide financial training required by the division for account owners.
Q. "Major home improvement or
repair" means a home improvement to a residential location that has
been occupied continuously by the account owner for at least 12 months and is
the principal residence of the account owner who is named as the mortgage
holder. The home improvement must be one
that increases the value of the residence or that will sustain the value of the
home as approved by the program administrator.
These improvements include, but are not limited to structural
alterations and reconstruction, changes for improved functions and
modernizations, elimination of health and safety hazards, and energy
conservation improvements.
R. "Matching funds" means
money deposited in a reserve account at a ratio of not less than one dollar
($1.00) of program administrator funds to one dollar ($1.00) of account owner
deposits to match the withdrawals for allowable uses from an individual development
account.
S. "Non-profit organization"
means an instrumentality of the state or an organization described in Section
501(c)(3) of the Internal Revenue Code of 1986 (26 U.S.C. X 501(c)(3)) and
exempt from taxation pursuant to Section 501(a) of that code.
T. "Post-secondary or vocational
education" means a post-secondary university, community college,
vocational-technical school, institution or specialized degree-granting college
or school legally authorized to grant degrees or certificates.
U. "Program administrator"
means only 501(c)(3) nonprofit organizations, tribes and instrumentalities of
the state that are determined by the director to be eligible to offer an
individual development account program.
V. "Reserve account"
means an account established pursuant to the act in an authorized financial
institution in which matching funds are maintained and available for payment
for a predetermined allowable use following completion of all program requirements
by the account owner.
W. "Savings plan" means a
plan developed with an account owner and a program administrator defining
savings goals and program requirements, including the allowable use of both the
individual development account and the matching funds. The approved plan shall serve as the contract
between the account owner and the program administrator.
X. "Tribe" means an
Indian nation, tribe or pueblo located in whole or in part within New Mexico.
[2.79.1.7 NMAC - N,
04/29/2005]
2.79.1.8 RESPONSIBILITIES
OF THE DIVISION:
A. Annually, based on the availability
of state funds including administrative costs of program administrators, the
division shall solicit requests for proposals from non-profit organizations or
tribes interested in establishing or further developing an individual development
account program.
B. The director shall determine if
the entity is eligible to be a program administrator under the act and these
rules. Individual development account
programs and program administrators are subject to review and approval by the
director.
C. Prior to receiving funds pursuant to
the act, an individual development account program and program administrator
shall be approved the director.
D. The director shall monitor all
individual development account programs and program administrators subject to
the act and these rules and consult with the regional planning and development
councils (COGs/EDDs) on program implementation as needed to ensure that account
owners' accounts and the reserve fund accounts are being operated according to
federal law, the provisions of the act and these rules.
E. Each November, the division shall
provide a report of the activities under the act to the governor and to an
appropriate interim committee of the legislature.
F. The division shall provide staff
support and administrative services for the individual development account
advisory committee in accordance with the act.
[2.79.1.8 NMAC - N,
04/29/2005]
2.79.1.9 RESPONSIBILITIES
OF THE ADVISORY COMMITTEE: Pursuant to the act and these rules, the
advisory committee shall provide oversight of the administration of individual
development account programs operated by program administrators and subject to
the act and these rules, suggest possible changes that benefit account owners
or improve the effectiveness of the individual development account programs
throughout the state.
A. The advisory committee shall meet at
least two times in a calendar year to review the implementation of the act and
these rules.
B. The advisory committee members are
appointed by the governor and consist of the lieutenant governor and eight
members to represent the state geographically.
The director or his designee serves as an ex-officio member of the
advisory committee.
[2.79.1.9 NMAC - N,
04/29/2005]
2.79.1.10 PARTICIPATION
CRITERIA FOR PROGRAM ADMINISTRATORS:
A. In order to receive state funds and
be approved by the director, a program administrator shall demonstrate, to the
satisfaction of the division, that it meets the criteria below.
(1) It shall qualify as a
tax-exempt, not-for-profit organization under Sections 501(a) and 501(c)(3) of
the Internal Revenue Code of 1986, a tribe or an instrumentality of the state.
(2) It shall establish a
reserve account with an authorized financial institution sufficient to meet the
matching fund commitments made to all account owners participating in the
program and shall report at least quarterly to each account owner the amount of
money available in the reserve account to match the account owner’s withdrawal
for an allowable use following completion of all program requirements.
(3) It shall offer a
comprehensive financial literacy program and other necessary training pertinent
to the allowable uses agreed to by the account owner either with its own staff
or through a plan of action utilizing qualified providers.
(4) It shall develop
partnerships with financial institutions, develop account owner matching funds
and manage the operations of an individual development account that is
established by the program administrator with fiduciary care.
(5) It shall have access
to facilities that are reasonably accessible to account owners and comply with
state and federal building laws.
(6) It shall have human
and material resources sufficient to implement an individual development
account program and shall have a successful history of providing service to
low-income persons and of success in raising funds for that purpose. If it is a new organization, it shall have
staff and board members who have had such experience in other organizations.
(7) It shall present a
workable plan for development, implementation, fiduciary care and management of
an individual development account program.
The plan shall include endorsement from at least one cooperating local
financial institution. The plan shall
indicate the length of time, in months and years, of the operation of the
program by the organization, taking into account the resources that are or will
be available.
(8) It shall provide a
description of its contingency plan in the event the program administrator is
no longer able to operate the program.
Such contingency plan shall include, but not be limited to:
(a)
a requirement of immediate notice to all account owners and the
division; and
(b) all actions the program administrator
shall take to ensure the orderly closing of the program.
(9) It shall not possess
any other deficit that may raise doubt as to its ability to administer an
individual development account program, including but not limited to,
conviction of a crime by any officer of the program administrator.
(10) It shall enter into
a contract with the division delineating its responsibilities in a form
prescribed by the division.
B. The division may conduct site
reviews of any individual development account program administrator at any time
for compliance with applicable regulations and contracts. The program administrator shall provide the
division with full access to any program records upon request.
[2.79.1.10 NMAC - N,
04/29/2005]
2.79.1.11 ACCOUNT
OWNER AGREEMENT: The program administrator operating an
approved individual development account program shall be required to enter into
an account owner agreement containing the following minimum requirements with
an eligible individual:
A. a provision that the program
administrator and account owner shall establish, in a timely manner, an
individual development account in an authorized financial institution;
B. a deposit plan specifying the
amount, form and schedule of deposits to be made by the account owner;
C. the rate at which the account
owner's deposits will be matched;
D. the allowable use for which the
account is maintained;
E. a provision that the program
administrator shall provide financial literacy and asset-specific training
approved by the division;
F. a provision that the account owner
shall attend the financial literacy and asset-specific training;
G. an explanation of the withdrawal
policies, including:
(1) the policies governing withdrawal of
savings upon completion of the program,
(2) early withdrawal due to an account owner's
decision to leave the program,
(3) termination of account due to non-compliance
by the account owner, and
(4) emergency withdrawals including the
provision that if an account owner withdraws money from his individual
development account for a use other than an allowable use, he forfeits a
proportionate amount from the reserve account unless an amount equal to the withdrawn
money is deposited into his individual development account within the twelve
months following the withdrawal;
H. a provision that the account
owner may request an emergency withdrawal;
I. a provision allowing for the
development of a contingency plan in the event the account owner exceeds or
fails to meet the savings goals outlined in the savings agreement;
J. a provision that the program
administrator shall implement the contingency plan on record with the
division in the event the organization
is no longer able to operate the program [Paragraph (8) of Subsection A of
2.79.1.10 NMAC];
K. a provision that any agreement
for the investment of assets shall be at the direction of the account owner
after consultation with the program administrator;
L. a provision that the program
administrator shall not require an account owner to make any purchase or enter
into any commercial transaction with a specific individual, business, financial
institution, or other entity, other than the authorized financial institution
in which the individual development account savings account is held;
M. a provision designating one or
more beneficiaries of the funds, plus accrued interest, deposited by the
account owner in the individual development account in the event of the account
owner's death;
N. a verification that the eligible
individual maintains no other individual development account; and
O. a provision that the agreement
may be modified only with the written concurrence of the program administrator
and the account owner.
[2.79.1.11 NMAC - N,
04/29/2005]
2.79.1.12 FINANCIAL
INSTITUTIONS: A program administrator operating an approved
state individual development account program shall be required to enter into a
written governing instrument with an authorized financial institution. The written governing agreement shall provide
for:
A. the establishment of individual
development accounts in the form of trust or custodial accounts for the benefit
of the account owners, which meet the requirements of Section 404(5) of the
Assets for Independence Act, as amended, and into which accounts the account
owners shall make deposits;
B. an assurance that the financial
institution shall pay at least a market rate of interest on the individual
development accounts;
C. an assurance that the financial
institution shall not charge fees on the account;
D. an assurance that if an account
owner appears on ChexSystems, the financial institution will open the account
as long as it does not violate the internal administrative rules of the
financial institution; refusal to open an account based upon this may occur
only in extreme circumstances such as the account owner having a previous
conviction of fraud or other crime;
E. an assurance that the financial
institution shall provide monthly savings statements to both the account owner
and the program administrator; and
F. an assurance that the financial
institution shall not require an account owner to make any purchase or enter
into any commercial transaction with a specific individual, business, financial
institution or other entity.
[2.79.1.12 NMAC - N,
04/29/2005]
2.79.1.13 INDIVIDUAL
DEVELOPMENT ACCOUNT SAVINGS ACCOUNTS:
A. A program administrator shall apply
criteria for minimum and maximum levels of deposit and minimum number of months
that may go by without a deposit into the account. These criteria may be determined based upon
the circumstances of the population to be served.
B. A program administrator approved by
the director shall maintain a separate trust or custodial account for each
account owner in an authorized financial institution. The trust account shall be an
interest-bearing savings instrument not less favorable to the depositor than
the rates and fees of prevailing market rate accounts of each participating financial
institution, applicable to like deposits by financial institutions in this
state, bearing rates and fees at least as favorable to the depositor as the
best terms available to other customers with similar accounts at each
participating financial institution.
C. To the extent that available
funding, including funding from both public and non-public sources may allow,
the match rate shall be at least one dollar ($1.00) for each one dollar ($1.00)
deposited by the account owner into his individual development account.
D. An eligible individual may open an
individual development account upon verification by the program administrator
that the individual maintains no other individual development account and
fulfillment of all other requirements of the act and these rules.
E. An account owner shall complete a
financial education program and all requirements made by the program
administrator prior to the withdrawal of money from the account.
F. No withdrawal of funds from any
individual development savings account may be permitted by a financial
institution without signatures of both the account owner and an authorized
representative of the program administrator.
The financial institution in which an individual development account is
held shall not be liable for withdrawals made for uses other than allowable
uses. Prior to consenting to any
withdrawal of funds, a representative of the program administrator shall
discuss with the account owner the consequences of the intended withdrawal of
funds. The program administrator may not unreasonably withhold its consent to
the withdrawal.
G. The account owner may, upon the
approval of the program administrator, withdraw moneys from the account owner's
individual development account in the form of a joint check or transfer of
funds made payable to the account owner and the payee of the approved
withdrawal for any of the following allowable uses:
(1) expenses to attend an
approved post-secondary or vocational educational institution, including, but
not limited to, payment for tuition, books, supplies and equipment required for
courses;
(2) costs to acquire or
construct a principal residence that is the first principal residence acquired
or constructed by the account owner;
(3) costs of major home
improvements or repairs on the principal residence of the account owner;
(4) capitalization or
costs to start or expand a business including equipment, tangible personal
property, operational and inventory expenses, legal and accounting fees and
other costs normally associated with starting or expanding a business; and
(5) acquisition of a
vehicle necessary to obtain or maintain employment by an account owner or the
spouse of an account owner.
H. In the case of a deceased account
owner, amounts deposited by the account owner and held in an individual
development account shall be distributed directly to the account owner's
spouse, or if the spouse is deceased or there is no spouse, to a dependent or
other named beneficiary of the deceased if not in conflict with the New Mexico
Uniform Probate Code, Sections 45-1-101 through 45-1-404 NMSA 1978. If the spouse, dependent or beneficiary is
eligible to maintain the account, according to the provisions of Section
58-30-4, NMSA 1978 and 2.79.1.14 NMAC, then the account as well as matching
funds designated for that account from the program reserve fund of the program
administrator may be transferred and maintained in the name of the surviving
spouse, dependent or beneficiary.
I. In the event that an account
owner withdraws any money from an individual development account for a purpose
other than an allowable use, there shall be a proportional reduction in the
amount of money held by the program administrator in the reserve account
maintained for that account owner.
However, if within twelve months following the withdrawal of funds the
account owner deposits an amount equal to the withdrawn money, the proportional
amount held by the program administrator shall be maintained.
J. More than one eligible
individual per household may hold an individual development account.
K. At the request of the account
owner and with the written approval of the program administrator, amounts may
be withdrawn from the account owner’s individual development account and
deposited in another individual development account established for an eligible
individual who is the account owner’s spouse or dependent.
[2.79.1.13 NMAC - N,
04/29/2005]
2.79.1.14 ELIGIBLE
ACCOUNT OWNERS:
A. To participate as an account
owner in an individual development account program approved by the director an
individual, at the time of application, shall be a member of a household
located in New Mexico whose adjusted gross income is not in excess of 200
percent of the federal poverty guidelines and shall:
(1) have earned income;
(2) be eighteen years of
age or older; and
(3) be a citizen or legal
resident of the United States.
B. A child in foster care is an
eligible individual if he:
(1) is sixteen years of
age or older;
(2) has earned income
that is no more than 200 percent of the federal poverty guidelines when the
child's income is evaluated separately from the income of his foster household;
(3) is a citizen or legal
resident of the United States; and
(4) is a resident of New
Mexico.
[2.79.1.14 NMAC - N,
04/29/2005]
2.79.1.15 REPORTING
REQUIREMENTS OF PROGRAM ADMINISTRATORS: A program administrator whose individual
development account program is approved by the director shall report to the
division no later than November 1st of each year. The report shall not identify individual
account owners and shall include, but not be limited to:
A. the number of individual development
accounts established, by savings objective, and their status;
B. verification that deposits are
being made by the account owners pursuant to the approved savings plans;
C. the balance and sources of
funding in the program administrator's local reserve fund;
D. the total money in the aggregate
deposited in individual development accounts and reserve accounts administered
by the program administrator;
E. the amounts withdrawn from
individual development accounts for either allowable uses or for uses other
than allowable uses;
F. the projected balance of
savings to be deposited by account owners, by quarter, in order to complete
their savings goal;
G. levels of participation in
financial literacy education courses differentiating between individual
development account participants and the general public; and
H. other information requested by
the director to monitor the costs and outcomes of the individual development
account program.
[2.79.1.15 NMAC - N,
04/29/2005]
2.79.1.16 TERMINATION
OF INDIVIDUAL DEVELOPMENT ACCOUNT PROGRAMS APPROVED UNDER THE ACT:
A. An individual development
account program shall be terminated if:
(1) the division determines that the
individual development account program or program administrator is not
operating pursuant to the provisions of the Individual Development Account Act
or these rules;
(2) the provider of the program no longer
retains its status as a program administrator;
(3) the program
administrator ceases to provide an individual development account program; or
(4) the division provides written notice to
the program administrator.
B. If a program is terminated the
division shall seek to transfer management of the terminated program to another
qualified entity awarded a contract under previous RFP processes.
C. If the division is unable to
identify and approve a program administrator to assume the authority to
continue to operate a terminated individual development account program, money
held in the terminated program administrator’s reserve fund shall be deposited
into the individual development accounts of the account owners for whom the
proportionate share of the reserve account was established as of the first day
of termination of the program.
D. If a program with active individual
development accounts is terminated, the division shall assume the
responsibilities of the program administrator until such time as a new program
administrator is assigned to manage the individual development accounts of the
account holders of a terminated program.
[2.79.1.16 NMAC - N,
04/29/2005]
2.79.1.17 NON-DISCRIMINATION:
A. No eligible individual, as
defined by the act and these rules, shall be excluded from participation in, be
denied benefits of, or be subjected to discrimination under any activity or
program funded in whole or in part with division funds on the grounds of the
race, religion, color, national origin, sex, sexual preference, age, or
handicap of any person.
B. If an individual believes that
he has been unfairly denied access to an approved state individual development
account program or otherwise treated inequitably as an account owner, the
individual may file a complaint with the division no later than thirty days
after the alleged injury. The division
shall investigate the complaint and shall attempt to informally resolve
it. Where applicable, the division may
refer the individual to the appropriate state or federal agency for potential
relief.
[2.79.1.17 NMAC - N,
04/29/2005]
HISTORY OF 2.79.1 NMAC: [Reserved].
