Family Savings Accounts (FSA)
Participant Rules and Guidelines
The Pennsylvania Family Savings Account (FSA) program is a matched savings program established as a partnership between the U.S. Department of Health and Human Services, Assets for Independence (AFIA), and the Pennsylvania Department of Community and Economic Development (DCED). [PA Act 23 of 1997]
DCED awards grants to community based non-profit agencies that establish and administer FSA programs in 66 Pennsylvania counties. The FSA program provides $1 to $1 match for eligible individuals or families.
FSA expands opportunities by providing financial literacy, requiring systematic long-term savings, and assisting with asset procurement through funding.
Individuals and families whose household earned income is not more than 200% of the official poverty standard or 80% of the area’s median income (whichever is higher). Local FSA agency will have current eligibility criteria. See www.FSAmoneyPA.com for Western PA counties.
A household net worth limit of $10,000 (Net Worth is determined by subtracting all debts from the value of household assets. However, for the FSA program, the value of one home and one vehicle are excluded from the asset total – qualifying more households) Eligibility Months. Income documents must be submitted from the 12 months just before the FSA application date. "Income" is based on >>>> The 12 months just before your application date.
Income is the total of all salaries, wages, interest, dividends, rent and investment income, unemployment compensation, and any other cash received by the household of the prospective saver applying for participation in FSA.
Excluded from income totals (i.e. – DOESN’T COUNT AS PART OF THE INCOME TOTAL):
Any social security income or welfare income
Choose ONE from each "Goal" Category
“Asset Goal” - How the savings & match will be spent
· Home Improvement or Repair · Education for Self/Child/Grandchild
· Car Purchase (for commuting to school or work)
· Business Start-Up or Improvement
"Saving Goal" - Match Fund Amount - The amount you choose is matched.
Saver Agreements
1. The saver must choose one “Asset Goal” and a “Savings Goal” amount.
2. The saver agrees to open an account with a FSA financial partner. (FDIC insured bank and credit union partnerships vary by FSA Agency)
NOTE: FSA savings accounts and their deposits are ALWAYS the property of the saver.
NOTE #2: Savers must agree to authorize the financial institution to send monthly account information to the FSA agency.
3. A formal contract is drafted and signed. The contract specifies the monthly deposit amount, saving goal, and the specific asset goal. The saver must maintain an average $40 per month deposit. Direct Deposit is preferred.
4. All saving deposits and requirements must be completed by the GOAL DATE. The “Goal Date” is 36 months from the day the contract is signed.
5. Saver understands that in the event of their death, only moneys deposited in the FSA Savings Account become part of the deceased estate. “Matching Funds” are never designated for survivors, nor are they part of the estate.
6. FSA saving accounts are fee-free during FSA program participation. However, all normal bank fees will apply when a saver completes or is terminated from the FSA Program. It is the saver’s option to close the account.
FINANCIAL EDUCATION is Free & Required
7. All savers learn and complete Expense Tracking and Budget development.
8. The saver agrees to participate in a minimum of four hours in Financial Literacy Workshops - preferably within the first six months. (some Agency specific requirements) Savers with an asset goal of “Home Purchase” must attend courses specifically geared toward home ownership. These courses also include the general Financial Literacy content as well as worthwhile home buying information.
9. In addition to Financial Literacy Workshops, the saver agrees to attend at least two (2) “elective” self-improvement offerings that are specific to their stated spending goal. (Examples: Home Depot or Lowest do-it-yourself class, learning how to maintain you car, learning about educational financing)
NOTE: Some agencies offer “Saving Coaches.” Meeting with and working with a Saving Coach satisfies these
“elective” requirements. (Based on Saving Coach’s evaluation of work/meetings completed)
Administrative Termination
The saver must understand that non-approved withdrawals, excessive withdrawals, inconsistent savings patterns, and misrepresentation or fraud are all grounds for Administrative Termination from the FSA program. Savers who have been terminated from the FSA program may not re-enter the program. Appeal of this determination by the FSA service agency may be submitted to the PA Department of Community & Economic Development for consideration.
Voluntary Withdrawal or “DROP-OUT”
Dropout: A saver who fails to reach the contract goals and voluntarily withdraws from the program.
Re-entry: Savers who had previously dropped out of the program but wish to re-enter are allowed. However, they must re-qualify as income eligible at the time of re-enrollment and the FSA Agency must have an available “slot” for enrollment.
Account Withdrawals BEFORE goals are reached
The deposits accumulated by the saver always belong to the saver, however, strict rules control withdrawals. A WITHDRAWAL MUST BE APPROVED BEFOREHAND. Only one withdrawal may be authorized per year and must be for a personal emergency. The Saver understands that withdrawing funds from their FSA savings account without meeting withdrawal requirements, or approval, results in the forfeit of any matching funds.
The FSA Case Manager may approve a withdrawal IF:
1. Regular deposits have been made for at least 6 months
2. Funds are withdrawn for a personal emergency. (“Personal Emergency” defined by PA law includes: medical expenses, payments to prevent eviction or foreclosure, payments for necessary living expenses affecting the health and safety of the saver and their family, or following loss of employment of the saver)
If funds withdrawn for emergency purposes are not repaid within 12 months following the date of the withdrawal, the saver may be terminated from the program. NOTE: Regular minimum deposits of $40 MUST be maintained IN ADDITION TO the replacement of the Emergency Withdrawal amount.
Large Deposits - Maximum $1000 per 12-month-period Rule
A primary objective of the FSA Program is to develop strong saving habits in participants. Habits are best established via regular savings over a significant length of time. Deposits of large lump sums in lieu of regular monthly savings circumvent the development of a saving habit. However, large deposits following tax filing are common amongst FSA savers and are approved as long as the $1000 per 12 month threshold is not surpassed.
Savers may not have deposits totaling more than $1000 per 12-month-period. (Note: MONTHLY deposits are ALWAYS mandatory)
EXAMPLE: During her first year, Jane saves $520.00 through routine deposits. She has three more months of minimum regular deposits to make before her second 12-month-period begins.
Minimum deposit of $40 multiplied by 3 (months remaining in 1st period) = $120 …….. ($40 x 3 = $120)
$120 + $520 (already saved) = $640
The difference between $640 and the $1000.00 maximum = $360 >>>>>>> The maximum large deposit (lump sum) for her 1st 12-month-period is $360.
Changing an ASSET GOAL or SAVING GOAL
Saver requests for changes in goal(s) may be made one time within the saver “contribution period.” The contribution period is 36 months after signing a FSA contract. [i.e. – Before the “GOAL DATE” is reached] This request must be sent, in writing, to the local FSA service agency.
Claiming Match Funds
1. No saver may claim match funds prior to 12 months + one day. (i.e. – Maximum $1000 per 12-month-period rule)
2. Savers are required to use competitive pricing techniques and complete all sections of their “Action Plan” prior to beginning the “claim” process. This includes the completion of all financial education and saving deposit requirements.
3. The savers must make an appointment with their FSA agency. Paperwork will be signed and completed for making an “Authorized Withdrawal.” These documents must include the name and address of the vender(s) chosen by the saver.
4. Funds from the FSA Savings account are withdrawn first – by means of a Cashier’s Check – which is made to the vender specified in the completed paperwork.
5. A copy of the Cashier’s Check MUST BE GIVEN TO THE FSA AGENCY prior to receiving Matching Funds. (Many financial partners will make a courtesy copy of the Cashier’s Check, or be willing to fax a copy to the FSA agency)
6. Next, MATCH FUNDS are awarded in the form of a check made out to a specific vendor(s). Participants must submit and sign a withdrawal form, with all relevant vender information. The FSA service agency then forwards the check to the vender.
7. 5. Savers must claim their Matching Funds no later than five (5) years from their GOAL DATE. Match funds not claimed by this date are forfeited.
PLEASE NOTE: There is never a limit on the number of venders.
For more information contact:
Department of Community and Economic Development
Center for Community Empowerment
Commonwealth Keystone Building
400 North Street, 4th Floor
Harrisburg, PA 17120-0225
Tel: 717-720-7331 | www.newPA.com
For programs in Western Pennsylvania see: http://fsamoneypa.com/aboutus.aspx
For programs outside of Pennsylvania – Referred to as IDA or Individual Development Accounts:
The Corporation for Enterprise Development (CFED) is a national nonprofit based in Washington, DC
http://cfed.org/programs/idas/ida_directory_list/
See this or save these FSA Rules & Regulations as a PDF by clicking HERE.