the individual, as defined in paragraph
(8)(B); or
‘‘(iii) payments necessary to enable
the individual to meet necessary living ex-
penses following loss of employment.
‘‘(4) HOUSEHOLD.—The term ‘‘household’’
means all individuals who share use of a dwelling
unit as primary quarters for living and eating sepa-
rate from other individuals.
‘‘(5) INDIVIDUAL DEVELOPMENT ACCOUNT.—
‘‘(A) IN GENERAL.—The term ‘‘individual
development account’’ means a trust created or
organized in the United States exclusively for
the purpose of paying the qualified expenses of
an eligible individual, or enabling the eligible in-
dividual to make an emergency withdrawal, but
only if the written governing instrument creat-
ing the trust meets the following requirements:
‘‘(i) No contribution will be accepted
unless it is in cash or by check.
‘‘(ii) The trustee is a federally insured
financial institution, or a State insured fi-
nancial institution if no federally insured
financial institution is available.
‘‘(iii) The assets of the trust will be
invested in accordance with the direction of
the eligible individual after consultation
with the qualified entity providing deposits
for the individual under section 694.
‘‘(iv) The assets of the trust will not
be commingled with other property except
in a common trust fund or common invest-
ment fund.
‘‘(v) Except as provided in clause (vi),
any amount in the trust which is attrib-
utable to a deposit provided under section
694 may be paid or distributed out of the
trust only for the purpose of paying the
qualified expenses of the eligible individual,
or enabling the eligible individual to make
an emergency withdrawal.
‘‘(vi) Any balance in the trust on the
day after the date on which the individual
for whose benefit the trust is established
dies shall be distributed within 30 days of
that date as directed by that individual to
another individual development account es-
tablished for the benefit of an eligible indi-
vidual.
‘‘(B) CUSTODIAL
ACCOUNTS.—For pur-
poses of subparagraph (A), a custodial account
shall be treated as a trust if the assets of the
custodial account are held by a bank (as de-
fined in section 408(n) of the Internal Revenue
Code of 1986) or another person who dem-
onstrates, to the satisfaction of the Secretary,
that the manner in which such person will ad-
minister the custodial account will be consistent
with the requirements of this part, and if the
custodial account would, except for the fact that
it is not a trust, constitute an individual devel-
opment account described in subparagraph (A).
For purposes of this part, in the case of a cus-
todial account treated as a trust by reason of
the preceding sentence, the custodian of that
custodial account shall be treated as the trustee
thereof.
‘‘(6) PROJECT YEAR.—The term ‘‘project year’’
means, with respect to a demonstration project, any
of the 5 consecutive 12-month periods beginning on
the date the project is originally authorized to be
conducted.
‘‘(7) QUALIFIED ENTITY.—
‘‘(A) IN GENERAL.—The term ‘‘qualified
entity’’ means—
‘‘(i) one or more not-for-profit organi-
zations described in section 501(c)(3) of
the Internal Revenue Code of 1986 and ex-
empt from taxation under section 501(a)
of such Code; or
‘‘(ii) a State or local government
agency, or a tribal government, submitting
an application under section 689 jointly
with an organization described in clause
(i).
‘‘(B) RULE OF CONSTRUCTION.—Nothing
in this paragraph shall be construed as prevent-
ing an organization described in subparagraph
(A)(i) from collaborating with a financial insti-
tution or for-profit community development cor-
poration to carry out the purposes of this part.
‘‘(8) QUALIFIED EXPENSES.—The term ‘‘quali-
fied expenses’’ means 1 or more of the following, as
provided by the qualified entity:
‘‘(A) POSTSECONDARY EDUCATIONAL EX-
PENSES.—Postsecondary educational expenses
paid from an individual development account di-
rectly to an eligible educational institution. In
this subparagraph:
‘‘(i) POSTSECONDARY
EDUCATIONAL
EXPENSES.—The 
term 
‘‘postsecondary
educational expenses’’ means the following:
‘‘(I) TUITION
AND
FEES.—Tui-
tion and fees required for the enroll-
ment or attendance of a student at an
eligible educational institution.
‘‘(II) FEES, BOOKS, SUPPLIES,
AND EQUIPMENT.—Fees, books, sup-
plies, and equipment required for
courses of instruction at an eligible
educational institution.
‘‘(ii) ELIGIBLE EDUCATIONAL INSTI-
TUTION.—The term ‘‘eligible educational
institution’’ means the following:
‘‘(I) INSTITUTION
OF
HIGHER
EDUCATION.—An institution described
in section 481(a)(1) or 1201(a) of the
Higher Education Act of 1965 (20
U.S.C. 1088(a)(1) or 1141(a)), as
such sections are in effect on the date
of enactment of this part.
‘‘(II) 
POSTSECONDARY
VOCA-
TIONAL
EDUCATION
SCHOOL.—An
area vocational education school (as
defined in subparagraph (C) or (D) of
section 521(4) of the Carl D. Perkins
Vocational and Applied Technology
Education Act (20 U.S.C. 2471(4)))
which is in any State (as defined in
section 521(33) of such Act), as such
sections are in effect on the date of
enactment of this part.
‘‘(B) FIRST-HOME
PURCHASE.—Qualified
acquisition costs with respect to a principal res-
idence for a qualified first-time homebuyer, if
paid from an individual development account di-
rectly to the persons to whom the amounts are
due. In this subparagraph:
‘‘(i) 
PRINCIPAL
RESIDENCE.—The
term ‘‘principal residence’’ means a prin-
cipal residence, the qualified acquisition
costs of which do not exceed 100 percent
of the average area purchase price applica-
ble to such residence.
‘‘(ii) 
QUALIFIED
ACQUISITION
COSTS.—The term ‘‘qualified acquisition
costs’’ means the costs of acquiring, con-
structing, or reconstructing a residence.
The term includes any usual or reasonable
settlement, financing, or other closing
costs.
‘‘(iii) QUALIFIED FIRST-TIME HOME-
BUYER.—
‘‘(I) IN
GENERAL.—The term
‘‘qualified 
first-time 
homebuyer’’
means an individual participating in
the project (and, if married, the indi-
vidual’s spouse) who has no present
ownership interest in a principal resi-
dence during the 3-year period ending
on the date of acquisition of the prin-
cipal residence to which this subpara-
graph applies.
‘‘(II) DATE
OF
ACQUISITION.—
The term ‘‘date of acquisition’’ means
the date on which a binding contract
to acquire, construct, or reconstruct
the principal residence to which this
subparagraph applies is entered into.
‘‘(C) 
BUSINESS
CAPITALIZATION.—
Amounts paid from an individual development
account directly to a business capitalization ac-
count which is established in a federally insured
financial institution (or in a State insured fi-
nancial institution if no federally insured finan-
cial institution is available) and is restricted to
use solely for qualified business capitalization
expenses. In this subparagraph:
‘‘(i) QUALIFIED
BUSINESS
CAPITAL-
IZATION EXPENSES.—The term ‘‘qualified
business capitalization expenses’’ means
qualified expenditures for the capitalization
of a qualified business pursuant to a quali-
fied plan.
‘‘(ii) QUALIFIED
EXPENDITURES.—
The term ‘‘qualified expenditures’’ means
expenditures included in a qualified plan,
including capital, plant, equipment, work-
ing capital, and inventory expenses.
‘‘(iii) 
QUALIFIED
BUSINESS.—The
term ‘‘qualified business’’ means any busi-
ness that does not contravene any law or
public policy (as determined by the Sec-
retary).
‘‘(iv) QUALIFIED
PLAN.—The term
‘‘qualified plan’’ means a business plan, or
a plan to use a business asset purchased,
which—
‘‘(I) is approved by a financial in-
stitution, a microenterprise develop-
ment organization, or a nonprofit loan
fund having demonstrated fiduciary
integrity;
‘‘(II) includes a description of
services or goods to be sold, a market-
ing plan, and projected financial
statements; and
‘‘(III) may require the eligible in-
dividual to obtain the assistance of an
experienced entrepreneurial adviser.
‘‘(D) TRANSFERS
TO
IDAS
OF
FAMILY
MEMBERS.—Amounts paid from an individual
development account directly into another such
account established for the benefit of an eligible
individual who is—
‘‘(i) the individual’s spouse; or
‘‘(ii) any dependent of the individual
with respect to whom the individual is al-
lowed a deduction under section 151 of the
Internal Revenue Code of 1986.
‘‘(9) QUALIFIED SAVINGS OF THE INDIVIDUAL
FOR THE PERIOD.—The term ‘‘qualified savings of
the individual for the period’’ means the aggregate
of the amounts contributed by the individual to the
individual development account of the individual
during the period.
‘‘(10) SECRETARY.—The term ‘‘Secretary’’
means the Secretary of Health and Human Services.
‘‘(11) TRIBAL GOVERNMENT.—The term ‘‘tribal
government’’ means a tribal organization, as defined
in section 4 of the Indian Self-Determination and
Education Assistance Act (25 U.S.C. 450b) or a Na-
tive Hawaiian organization, as defined in section
9212 of the Native Hawaiian Education Act (20
U.S.C. 7912).
‘‘SEC. 689. APPLICATIONS.
‘‘(a) 
ANNOUNCEMENT
OF
DEMONSTRATION
PROJECTS.—Not later than 3 months after the date of
enactment of this part, the Secretary shall publicly an-
nounce the availability of funding under this part for dem-
onstration projects and shall ensure that applications to
conduct the demonstration projects are widely available to
qualified entities.
‘‘(b) SUBMISSION.—Not later than 6 months after
the date of enactment of this part, a qualified entity may
submit to the Secretary an application to conduct a dem-
onstration project under this part.
‘‘(c) CRITERIA.—In considering whether to approve
an application to conduct a demonstration project under
this part, the Secretary shall assess the following:
‘‘(1) SUFFICIENCY OF PROJECT.—The degree
to which the project described in the application ap-
pears likely to aid project participants in achieving
economic self-sufficiency through activities requiring
qualified expenses. In making such assessment, the
Secretary shall consider the overall quality of project
activities in making any particular kind or combina-
tion of qualified expenses to be an essential feature
of any project.
‘‘(2) ADMINISTRATIVE
ABILITY.—The experi-
ence and ability of the applicant to responsibly ad-
minister the project.
‘‘(3) ABILITY TO ASSIST PARTICIPANTS.—The
experience and ability of the applicant in recruiting,
educating, and assisting project participants to in-
crease their economic independence and general well-
being through the development of assets.
‘‘(4) COMMITMENT OF NON-FEDERAL FUNDS.—
The aggregate amount of direct funds from non-
Federal public sector and from private sources that