2023 New Mexico Statutes › Chapter 58 - Financial Institutions and Regulations › Article 30 - Individual Development Account › Section 58-30-8 - 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A. Allowable uses of the money withdrawn from an individual development account are limited to the following: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 within the previous five years;
(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 or repair 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 account may be transferred and maintained in the name of the surviving spouse, dependent or beneficiary.
B. Unless otherwise approved by the program administrator pursuant to the provisions of Subsection D of this section, account owners qualifying as eligible individuals pursuant to the provisions of Subsection B or C of Section 58-30-4 NMSA 1978 shall not be permitted to withdraw money from an individual development account until such time as the account owners have completed a high school curriculum at a public or accredited private New Mexico high school or received a general educational development certificate.
C. Except as provided in Subsection D of this section, if an account owner withdraws money from an individual development account for a use other than an allowable use, the account owner 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.
D. The program administrator may approve a withdrawal by an account owner from an 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 department. For such an approved withdrawal, the proportionate matching funds in the reserve account shall remain in the reserve account for twelve months following the withdrawal and, if an amount equal to the withdrawn money is redeposited in the individual development account within the twelve months, the matching funds shall again be available to match withdrawals for allowable uses.
E. 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 or a qualified tuition program, as defined in Section 529 of the Internal Revenue Code of 1986, established for an eligible individual who is the account owner's spouse or dependent.
History:
Laws 2003, ch. 362, § 8; 2006, ch. 96, § 8; 2007, ch. 349, § 8; 2015, ch. 122, § 22; 2019, ch. 225, § 9.
ANNOTATIONS
The 2019 amendment,
effective January 1, 2020, expanded the allowable uses for funds in individual development accounts; in Subsection A, Paragraph A(2), after "by the account owner", added "within the previous five years", and in Paragraph A(5), after "acquisition", added "or repair"; in Subsection B, after "high school or received a", deleted "high school equivalency credential" and added "general educational development certificate"; and in Subsection E, after "another individual development account", added "or a qualified tuition program, as defined in Section 529 of the Internal Revenue Code of 1986".
The 2015 amendment,
effective July 1, 2015, replaced "general education development certificate" with "high school equivalency credential" relating to individual development accounts in the Individual Development Account Act; and in Subsection B, after "high school or received a", deleted "general educational development certificate" and added "high school equivalency credential".
The 2007 amendment,
effective July 1, 2007, changes the title of the act; changes "family opportunity account" to "individual development account"; and adds Subsection B.
The 2006 amendment,
effective July 1, 2006, changes "individual development account" to "family opportunity account" and "Individual Development Account Act" to "Family Opportunity Accounts Act" in Subsection A; adds the exception provided in Subsection C at the beginning of Subsection B and deletes the former provision, which provided for forfeiture of matching funds; and in Subsection C, changes "director" to "office and adds the provision that provides for the retention of matching funds in the reserve account.