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    "ocrText": "202 622 5672\nP.02\nTAX POLICY\nIDA Issues (and Proposed Treasury Alternatives) 10/6/00\nEligibility\nRoth Mark\nPersons living in a household with a gross income not exceeding 60 percent of the national\nmedian family income (as published by Bureau of the Census) and having a net worth of less\nthan $10,000 (excluding the primary dwelling unit, one car, and any IDAs) would be eligible\nto contribute $2,000 per year to an IDA.\nTreasury Alternative\nIndividuals aged 18 through 60 (except students enrolled on more than a half-time basis)\nwould be eligible to contribute $2,000 per year to an IDA if AGI for the prior year did not\nexceed $15,000 ($30,000 on a joint return). Eligibility to make contributions would phase\nout between $15,000 and $25,000 in AGI ($30,000 and $50,000 on joint returns).\nRationale for Change\nIndividuals residing together in a household may report income on multiple tax returns, thereby\ncomplicating the tasks of establishing and verifying eligibility for both financial institutions and\nthe IRS. In a similar vein, net worth is not a measure currently used in administration of the tax\nsystem. Moving to an AGI-based criteria would make IDAs better comport with the existing tax\nsystem and its administrative mechanisms.\nQualified Distributions\nRoth Mark\nQualified use for distributions, meaning those purposes for which distributions might be\ntaken without forfeiture of matching funds and earnings thereon, would include qualified\nhigher education expenses, qualified first-time home buyer costs, qualified business\ncapitalization costs and the qualified rollover of funds into another IDA.\nTreasury Alternative\nQualified uses for distributions would include higher education expenses, first-time home\npurchase, and the rollover of funds into another IDA, but not business capitalization costs.\nAlso, should we allow distributions for medical expenses (as under sec. 72(t)(2)(B))?\nRationale for Change\nThe Internal Revenue Code presently contains carefully constructed yet workable definitions of\nqualified higher education and qualified first-time home buyer costs for IRA withdrawal\npurposes (see sec. 72(t)(7) & (8)). A similarly workable definition of qualified rollovers from"
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