AN ACT
RELATING TO ASSET BUILDING;
ESTABLISHING A PROGRAM THAT ADMINISTERS INDIVIDUAL DEVELOPMENT ACCOUNTS;
ENACTING THE INDIVIDUAL DEVELOPMENT ACCOUNT ACT; AMENDING AND ENACTING SECTIONS
OF THE NMSA 1978.
BE IT ENACTED BY THE LEGISLATURE OF
THE STATE OF NEW MEXICO:
Section 1. SHORT TITLE.--Sections 1 through 12 of this
act may be cited as the "Individual Development Account Act".
Section 2. DEFINITIONS.--As used in the Individual
Development Account Act:
A. "account owner" means the person in
whose name an individual development account is originally established;
B. "allowable use" means a use that
complies with the provisions of the Individual Development Account Act, or
rules adopted pursuant to that act;
C. "authorized financial institution"
means a financial institution authorized by the division to hold and manage
individual development accounts and reserve accounts;
D. "director" means the director of
the division;
E. "division" means the local
government division of the department of finance and administration;
F. "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;
G. "eligible individual" means a
person who meets the criteria for opening an individual development account;
H. "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;
I. "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 provisions of the Individual
Development Account Act;
J. "individual development account
program" means a program 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;
K. "matching funds" means money
deposited in a reserve account to match the withdrawals for allowable uses from
an individual development account according to a proportionate formula that
complies with rules adopted by the director;
L. "nonprofit organization" means an
instrumentality of the state or an organization described in Section 501(c)(3)
of the Internal Revenue Code of 1986 and exempt from taxation pursuant to
Section 501(a) of that code;
M. "program administrator" means a
nonprofit organization or tribe that is determined by the director to be
eligible to offer an individual development account program;
N. "reserve account" means an account
established pursuant to the Individual Development Account 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; and
O. "tribe" means an Indian nation,
tribe or pueblo located in whole or in part within New Mexico.
Section 3. INDIVIDUAL DEVELOPMENT ACCOUNTS.--An
individual development account may be established for an eligible individual as
part of an individual development account program if the written instrument
creating the account sets forth the following:
A. the account owner is an eligible individual
according to program requirements at the time the account is established;
B. the individual development account is
established and maintained in an authorized financial institution;
C. deposits to an individual development account
shall be made in accordance with the rules adopted pursuant to the Individual
Development Account Act;
D. withdrawals from an individual development
account may be only for allowable uses, unless approved by the program
administrator as set forth in the rules adopted pursuant to the Individual
Development Account Act; and
E. the financial institution in which an
individual development account is held shall not be liable for withdrawals made
for uses other than allowable uses.
Section 4. ELIGIBLE INDIVIDUALS.--
A. Except as set forth in Subsection B of this
section, an eligible individual shall have earned income and shall be:
(1) eighteen years of age or older;
(2) a citizen or legal resident of the United
States;
(3) a resident of New Mexico; and
(4) a member of a household with earned income
that is no more than two hundred percent of the federal poverty guidelines for
the size of the household.
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 two
hundred percent of the federal poverty guidelines for a family of one, 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.
Section 5. RESPONSIBILITIES OF THE DIVISION.--
A. By December 31 following the effective date
of the Individual Development Account Act, the director shall adopt rules
implementing the provisions of that act.
B. The director shall make an annual report each
November to the governor and to an appropriate interim committee of the
legislature.
C. The division shall use no more than five
percent of the money appropriated to fund the Individual Development Account
Act to administer that act.
Section 6. ADVISORY COMMITTEE.--
A. An advisory committee shall be created to
provide oversight of the administration of individual development account
programs and to suggest possible changes that benefit account owners or improve
the effectiveness of the individual development account programs throughout the
state.
B. The advisory committee shall meet at least
two times in a calendar year to review the implementation of the Individual
Development Account Act.
C. The advisory committee shall consist of the
lieutenant governor and eight members appointed by the governor to represent
the state geographically. The director
or his designee shall serve as an ex-officio member of the advisory committee.
D. Members of the advisory committee who are
account owners shall receive per diem and mileage pursuant to the Per Diem and
Mileage Act and shall receive no other compensation, perquisite or allowance
for their participation on the advisory committee.
E. The division shall provide adequate staff
support and administrative services for the advisory committee.
Section 7. ADMINISTRATION OF INDIVIDUAL DEVELOPMENT
ACCOUNT PROGRAMS.--
A. An individual development account may be
established for an eligible individual, provided the money deposited in the
account is expended for allowable uses for the account owner or the account
owner's spouse or dependents, unless otherwise approved by the program
administrator.
B. An individual development account program
shall be approved and monitored by the director for compliance with applicable
law, the Individual Development Account Act and rules adopted pursuant to that
act.
C. An individual development account program
shall establish a reserve account sufficient to meet the matching fund
commitments made to all account owners participating in the individual
development account program and shall report at least quarterly to each account
owner the amount of money available in the reserve account for use by the
program administrator to match withdrawals for allowable uses.
D. An individual development account program
shall provide financial education and other necessary training pertinent to
allowable uses by account owners, develop partnerships with financial
institutions, develop matching funds and manage the operations of an individual
development account that is established within the program.
E. The division shall adopt rules necessary to
implement the Individual Development Account Act.
F. An eligible individual may open an individual
development account upon verification by the program administrator that the
individual maintains no other individual development account.
G. More than one eligible individual per household
may hold an individual development account.
H. An account owner shall complete a financial
education program prior to the withdrawal of money from his individual
development account.
Section 8. ALLOWABLE USES--WITHDRAWALS FROM INDIVIDUAL
DEVELOPMENT ACCOUNTS--FORFEITURE OF MATCHING FUNDS FROM RESERVE ACCOUNT--LOSS
OF ELIGIBLE INDIVIDUAL STATUS.--
A. Allowable uses of the money withdrawn from an
individual development account are limited to the following:
(1) expenses to attend an approved post-secondary
or vocational educational institution, including payment for tuition, books,
supplies and equipment required for courses;
(2) costs to acquire or construct a principal
residence as defined in rules adopted pursuant to the Individual Development
Account Act that is the first principal residence acquired or constructed by
the account owner;
(3) costs of major home improvements or repairs
on the home of the account owner;
(4) capitalization or costs to start or expand a
business, including capital, plant, equipment, operational and inventory
expenses, attorney and accountant 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 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 or if the recipient is eligible to maintain the account,
the account and matching funds designated for that account from a reserve fund
may be transferred and maintained in the name of the surviving spouse,
dependent or beneficiary.
B. If an account owner withdraws money from his
individual development account for a use other than an allowable use, he
forfeits a proportionate amount of matching funds from the reserve account, as
set forth in the agreement between the program administrator and the account
owner, unless an amount equal to the withdrawn money is redeposited to his
individual development account within the twelve months following the
withdrawal.
C. The program administrator may approve a
withdrawal by an account owner from his individual development account to be
used for a purpose other than an allowable use only for serious emergencies as
specified in the rules adopted by the director.
D. 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.
Section 9. APPROVAL OF INDIVIDUAL DEVELOPMENT ACCOUNT
PROGRAMS.--
A. Annually the division shall solicit a request
for proposals from nonprofit organizations or tribes interested in establishing an individual
development account program.
B. The director shall determine if an interested
nonprofit organization or tribe is eligible to be a program administrator.
C. Eligible program administrators shall develop
individual development account programs that are subject to review and approval
by the director.
D. The director shall approve an individual
development account program submitted by a program administrator before the
program establishes individual development accounts or reserve accounts or
provides services required by the Individual Development Account Act to eligible
individuals.
E. An individual development account and a
reserve account may be established only in an authorized financial institution.
F. The director shall monitor all individual
development account programs to ensure that individual development accounts and
reserve accounts are being operated according to federal law, the provisions of
the Individual Development Account Act and rules adopted pursuant to that act.
Section 10. TERMINATION OF INDIVIDUAL DEVELOPMENT ACCOUNT
PROGRAMS.--
A. An individual development account program
shall be terminated if the:
(1) division determines that the program is not
being operated pursuant to the provisions of the Individual Development Account
Act or rules adopted pursuant to that act;
(2) provider of the program no longer retains its
status as a program administrator; or
(3) program administrator chooses to cease
providing an individual development account program.
B. If the director is unable to identify and certify
a program administrator to assume the authority to continue to operate a
terminated individual development account program, money in a reserve account
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.
Section 11. REPORTING.--A program administrator operating
an individual development account program pursuant to the Individual
Development Account Act shall report at least annually to the director, as set
forth in the rules of the division.
Individual account owners shall not be identified in the report. The report shall include:
A. the number of eligible individuals making
contributions to individual development accounts;
B. the total money contributed to each
individual development account and deposited into each reserve account;
C. the total money in the aggregate deposited in
individual development accounts and reserve accounts administered by the
individual development account program;
D. the amounts withdrawn from individual
development accounts for either allowable uses or for uses other than allowable
uses and the amounts withdrawn from reserve accounts;
E. the balances remaining in individual
development accounts and reserve accounts; and
F. other information requested by the director
to monitor the costs and outcomes of the individual development account
program.
Section 12. ACCOUNT FUNDS DISREGARDED FOR PURPOSES OF
CERTAIN MEANS-TESTED PROGRAMS.--
A. Money deposited into an individual development
account, interest earned on that account and interest and matching funds
deposited in a reserve account for the benefit of the account owners shall be
disregarded for the purposes of determining eligibility for benefits and for
determining benefit amounts pursuant to the New Mexico Works Act.
B. When determining eligibility for benefits and
determining benefit amounts due under the food stamp program and medicaid, the
human services department shall, pursuant to the authority granted by 7 USCA
2014 (d) and (g), disregard money deposited into an individual development
account, interest earned on that account and interest and matching funds
deposited in a reserve account for the benefit of the account owners.
C. Money withdrawn from an individual development
account for a purpose other than an allowable use shall be counted as a
resource for purposes of the New Mexico Works Act, medicaid unless replaced
within the twelve-month allowable time period.
Section 13. Section 27-2B-7 NMSA 1978 (being Laws 1998,
Chapter 8, Section 7 and Laws 1998, Chapter 9, Section 7, as amended by Laws
2001, Chapter 295, Section 4 and by Laws 2001, Chapter 326, Section 4) is
amended to read:
"27-2B-7. FINANCIAL STANDARD OF NEED.--
A. The secretary shall adopt a financial
standard of need based upon the availability of federal and state funds and
based upon appropriations by the legislature of the available federal temporary
assistance for needy families grant made pursuant to the federal act in the
following categories:
(1) cash assistance;
(2) child care services;
(3) other services; and
(4) administrative costs.
The legislature shall determine the
actual percentage of each category to be used annually of the federal temporary
assistance for needy families grant made pursuant to the federal act.
B. The following income sources are exempt from
the gross income test, the net income test and the cash payment calculation:
(1) medicaid;
(2) food stamps;
(3) government-subsidized foster care payments if
the child for whom the payment is received is also excluded from the benefit
group;
(4) supplemental security income;
(5) government-subsidized housing or housing
payments;
(6) federally excluded income;
(7) educational payments made directly to an
educational institution;
(8) government-subsidized child care;
(9) earned income that belongs to a person
seventeen years of age or younger who is not the head of household;
(10) fifty dollars ($50.00) of collected child
support passed through to the participant by the department's child support
enforcement program; [and]
(11) earned income deposited in an individual
development account by a member of the benefit group or money received as
matching funds for allowable uses by the owner of the individual development
account pursuant to the Individual Development Account Act; and
(12) other income sources as determined by the
department.
C. The total countable gross earned and
unearned income of the benefit group
cannot exceed eighty-five percent of the federal poverty guidelines for the
size of the benefit group.
D. For a benefit group to be eligible to
participate:
(1) gross countable income that belongs to the
benefit group must not exceed eighty-five percent of the federal poverty
guidelines for the size of the benefit group; and
(2) net countable income that belongs to the
benefit group must not equal or exceed the financial standard of need after
applying the disregards set out in Paragraphs (1) through (4) of Subsection E
of this section.
E. Subject to the availability of state and
federal funds, the department shall determine the cash payment of the benefit
group by applying the following disregards to the benefit group's earned gross
income and then subtracting that amount from the benefit group's financial
standard of need:
(1) for the first two years of receiving cash
assistance or services, if a participant works over the work requirement rate
set by the department pursuant to the New Mexico Works Act, one hundred percent
of the income earned by the participant beyond that rate;
(2) for the first two years of receiving cash
assistance or services, for a two-parent benefit group in which one parent
works over thirty-five hours per week and the other works over twenty-four
hours per week, one hundred percent of income earned by each participant beyond
the work requirement rate set by the department;
(3) one hundred twenty-five dollars ($125) of
monthly earned income and one half of the remainder, or for a two-parent
family, two hundred twenty-five dollars ($225) of monthly earned income and one
half of the remainder for each parent;
(4) monthly payments made for child care at a
maximum of two hundred dollars ($200) for a child under two years of age and at
a maximum of one hundred seventy-five dollars ($175) for a child two years of
age or older;
(5) costs of self-employment income; and
(6) business expenses.
F. The department may recover overpayments of
cash assistance on a monthly basis not to exceed fifteen percent of the
financial standard of need applicable to the benefit group."
Section 14. Section 27-2B-10 NMSA 1978 (being Laws 1998,
Chapter 8, Section 10 and Laws 1998, Chapter 9, Section 10) is amended to read:
"27-2B-10. INDIVIDUAL DEVELOPMENT ACCOUNTS.--A
participant may establish an individual development account pursuant to the
Individual Development Account Act.
Section 15. EFFECTIVE DATE.--The effective date of the
provisions of this act is July 1, 2003.
HB 35
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