(1)A person may establish an individual development account only for a purpose approved by a fiduciary organization. Purposes that the fiduciary organization may approve are:
(a)The acquisition of post-secondary education or job training.
(b)If the account holder has established the account for the benefit of a household member who is under the age of 18 years, the payment of extracurricular nontuition expenses designed to prepare the member for post-secondary education or job training.
(c)If the account holder has established a savings network account for higher education under ORS 178.300 to 178.360 on behalf of a designated beneficiary, the funding of qualified higher education expenses as defined in ORS 178.300 by one or more deposits into a savings network account for higher educa Free access — add to your briefcase to read the full text and ask questions with AI
(1) A person may establish an individual development account only for a purpose approved by a fiduciary organization. Purposes that the fiduciary organization may approve are:
(a) The acquisition of post-secondary education or job training.
(b) If the account holder has established the account for the benefit of a household member who is under the age of 18 years, the payment of extracurricular nontuition expenses designed to prepare the member for post-secondary education or job training.
(c) If the account holder has established a savings network account for higher education under ORS 178.300 to 178.360 on behalf of a designated beneficiary, the funding of qualified higher education expenses as defined in ORS 178.300 by one or more deposits into a savings network account for higher education on behalf of the same designated beneficiary.
(d) The purchase of a primary residence. In addition to payment on the purchase price of the residence, account moneys may be used to pay any usual or reasonable settlement, financing or other closing costs. The account holder must not have owned or held any interest in a residence during the three years prior to making the purchase. However, this three-year period shall not apply to displaced homemakers, individuals who have lost home ownership as a result of divorce or owners of manufactured homes.
(e) The rental of a primary residence when housing stability is essential to achieve state policy goals. Account moneys may be used for security deposits, first and last months’ rent, application fees and other expenses necessary to move into the primary residence, as specified in the account holder’s personal development plan for increasing the independence of the person.
(f) The capitalization of a small business. Account moneys may be used for capital, plant, equipment and inventory expenses and to hire employees upon capitalization of the small business, or for working capital pursuant to a business plan. The business plan must have been developed with a financial institution, nonprofit microenterprise program or other qualified agent demonstrating business expertise and have been approved by the fiduciary organization. The business plan must include a description of the services or goods to be sold, a marketing plan and projected financial statements.
(g) Improvements, repairs or modifications necessary to make or keep the account holder’s primary dwelling habitable, accessible or visitable for the account holder or a household member. This paragraph does not apply to improvements, repairs or modifications made to a rented primary dwelling to achieve or maintain a habitable condition for which ORS 90.320 (1) places responsibility on the landlord. As used in this paragraph, “accessible” and “visitable” have the meanings given those terms in ORS 456.508.
(h) The purchase of equipment, technology or specialized training, as specified in the account holder’s personal development plan, that allows the person to become competitive in obtaining or maintaining employment, to start or maintain a business, or to increase the independence of an account holder.
(i) The purchase or repair of a vehicle, as specified in the account holder’s personal development plan for increasing the independence of the person.
(j) The saving of funds for retirement, as specified in the account holder’s personal development plan for increasing the independence of the person.
(k) The payment of debts to support the account holder’s personal development plan for increasing the independence of the person.
(L) The creation or improvement of a credit score by obtaining a secured loan or a financial product that is designed to improve credit, as specified in the account holder’s personal development plan for increasing the independence of the person.
(m) The replacement of a primary residence when replacement offers significant opportunity to improve habitability or energy efficiency.
(n) The establishment of savings for emergency expenses to promote financial stability and to protect existing assets as specified in the account holder’s personal development plan. As used in this paragraph, “emergency expenses” includes expenses for extraordinary medical costs or other unexpected and substantial personal expenses that would significantly impact the account holder’s noncash assets, health, housing or standard of living if not promptly addressed.
(2)(a) An account holder may withdraw all or part of the account holder’s deposits to an individual development account for any financial hardship as determined by the account holder, without regard to whether the account was established for emergency savings.
(b) The fiduciary organization shall remove from an account holder’s account any moneys deposited as matching funds to deposits withdrawn under this section, unless the withdrawn deposits were deposited and withdrawn for emergency expenses under subsection (1)(n) of this section.
(3)(a) If the account holder of an account established for the purpose set forth in subsection (1)(c) or (j) of this section has achieved the account’s approved purpose in accordance with the personal development plan developed by the account holder under ORS 458.680, the account holder may withdraw, or authorize the withdrawal of, the remaining amount of all deposits, including matching deposits, and interest in the account as follows:
(A) For an account established for the purpose set forth in subsection (1)(c) of this section, by rolling over the entire withdrawal amount, not to exceed the limit established pursuant to ORS 178.335, into one or more of the savings network accounts for higher education under ORS 178.300 to 178.360, the establishment of which is the purpose of the individual development account; or
(B) For an account established for the purpose set forth in subsection (1)(j) of this section, by rolling over the entire withdrawal amount into an individual retirement account, a retirement plan or a similar account or plan established under the Internal Revenue Code.
(b) Upon withdrawal of all moneys in the individual development account as provided in paragraph (a) of this subsection, the account relationship shall terminate.
(c) The rollover of moneys into a savings network account for higher education under this subsection may not cause the amount in the savings network account for higher education to exceed the limit on total contributions established pursuant to ORS 178.335.
(d) Any amount of the rollover that has been subtracted on the taxpayer’s federal return pursuant to section 219 of the Internal Revenue Code shall be added back in the determination of taxable income.
(4) If an account holder moves from the area where the program is conducted or is otherwise unable to continue in the program, the fiduciary organization may remove the account holder from the program.
(5) If an account holder is removed from the program under subsection (4) of this section, all matching deposits in the account and all interest earned on matching deposits shall revert to the fiduciary organization. The fiduciary organization shall use the reverted funds as a source of matching deposits for other accounts.