Personal Finance

Official RFD thread for Tax Free Savings Accounts (See Thread Summary)

Newbie
Sep 13, 2013
43 posts
33 upvotes
Vancouver, BC
TFSA Gurus, could you please help with some tips as we approach the end of the year. As I understand, when you have more than one TSFA and they are maxed out - best way is to withdraw money before January 1st and then deposit right after to avoid any penalties.

Hope you can clarify this too: say you opened a $10,000 TSFA @ 1% rate in January 2013 and say in December 2013 balance is $10,100. You withdraw $10,000 in December 2013 and in January 2014 deposit them into 2nd TSFA. Now you have 1st TSFA with $100+ and 2nd TSFA with $10,000+. How will CRA calculate my total contribution in 2014? Will it be sum of 2 accounts?

Thanks!
Deal Addict
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Mar 31, 2009
1219 posts
884 upvotes
burjui wrote: TFSA Gurus, could you please help with some tips as we approach the end of the year. As I understand, when you have more than one TSFA and they are maxed out - best way is to withdraw money before January 1st and then deposit right after to avoid any penalties.

Hope you can clarify this too: say you opened a $10,000 TSFA @ 1% rate in January 2013 and say in December 2013 balance is $10,100. You withdraw $10,000 in December 2013 and in January 2014 deposit them into 2nd TSFA. Now you have 1st TSFA with $100+ and 2nd TSFA with $10,000+. How will CRA calculate my total contribution in 2014? Will it be sum of 2 accounts?

Thanks!
The amount you take out in 2013 is added to your contribution room in 2014. So if you withdraw $10,000 from the first account in 2013 you will have $10,000 + $5500 = $15,500 contribution room on January 1 2014.

However, you could also simply choose to directly transfer from one TFSA to another and it will not have any effect on your contribution room. Some institutions may charge a fee for that though.

Also, you don't have to leave $100 in the first TFSA. You could withdraw the full $10,100 in 2013 and then on January 1 2014 your contribution room would be $10,100 + 5500 = $15,600. Whatever income you earn in your TFSA creates additional room for the future basically. Ie. right now the most anyone could have contributed to the TFSA is $25,500 - but if they would have invested all of that on a penny stock that went to the moon they might have $1,000,000 in their TFSA right now. They could withdraw it all today and then on January 1 2014 their contribution room would be $1,005,500.
Member
Apr 22, 2010
321 posts
9 upvotes
unknownone wrote: The amount you take out in 2013 is added to your contribution room in 2014. So if you withdraw $10,000 from the first account in 2013 you will have $10,000 + $5500 = $15,500 contribution room on January 1 2014.

However, you could also simply choose to directly transfer from one TFSA to another and it will not have any effect on your contribution room. Some institutions may charge a fee for that though.

Also, you don't have to leave $100 in the first TFSA. You could withdraw the full $10,100 in 2013 and then on January 1 2014 your contribution room would be $10,100 + 5500 = $15,600. Whatever income you earn in your TFSA creates additional room for the future basically. Ie. right now the most anyone could have contributed to the TFSA is $25,500 - but if they would have invested all of that on a penny stock that went to the moon they might have $1,000,000 in their TFSA right now. They could withdraw it all today and then on January 1 2014 their contribution room would be $1,005,500.

Say my max contributions is 20,000 and next year it will be 25,500 (+5,500) if I had nothing to this date. Now say I added 2500 to a trading account (QUESTRADE) and have 17,500 in a TFSA GIC so the total is $20,000 and I am maxed out until new contribution room comes in next year.

If I LOSE all of the $2,500 in the QUESTRADE account, my contribution for next year is $20,000 + $5,500 - $2,500 = $23,000 CORRECT?

But say I gain $2000 in my GIC and I withdraw everything before end of this year. Then even though I lost $2500 in my QUESTRADE account, my contributions for next year would be $20,000 - $2,500 + $5,500 + $2000 = $25,000??
Deal Addict
Feb 2, 2007
1108 posts
1118 upvotes
GTA
WildWolf wrote: Interest you've earned, you have to report ?
Yes, for a non-registered account, you should report any non-zero amount.
Deal Addict
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Mar 31, 2009
1219 posts
884 upvotes
Infinitii wrote: Say my max contributions is 20,000 and next year it will be 25,500 (+5,500) if I had nothing to this date. Now say I added 2500 to a trading account (QUESTRADE) and have 17,500 in a TFSA GIC so the total is $20,000 and I am maxed out until new contribution room comes in next year.

If I LOSE all of the $2,500 in the QUESTRADE account, my contribution for next year is $20,000 + $5,500 - $2,500 = $23,000 CORRECT?

But say I gain $2000 in my GIC and I withdraw everything before end of this year. Then even though I lost $2500 in my QUESTRADE account, my contributions for next year would be $20,000 - $2,500 + $5,500 + $2000 = $25,000??
Yes. If you lost the $2500 in the questrade account and your GIC had earned nothing, and you withdrew the GIC this year, your room next year would be the $17500 you withdrew plus 5500 new room = 23,000. If the GIC had earned $2000 and (again) you withdrew the whole GIC and lost the $2500 in the Questrade account the total room would be the $19500 you withdrew from the GIC and the new $5500 = $25,000.

Basically what you officially 'withdraw' this year is what you're allowed to put in again next year, plus the yearly $5500 increase.
Member
Aug 16, 2010
497 posts
215 upvotes
Langley, BC
reminder: the contribution rules say that if you withdraw money from your TFSA and put it back in a TFSA in the same year, then you add your withdrawl and your deposit together, and if they are over the contribution limit (I think it is 25,500 for 2013) then you have overcontributed, and there is a penalty.

You can however withdraw it before the end of a year, and put all of it in a new account at the beginning of the following year without penalty.
it should around 31000 in 2014 (25,500 + 5,500)
Deal Fanatic
Jul 8, 2010
7578 posts
576 upvotes
York
So how many of you stayed with Peoples Trust even after the hacking? I'm just looking for the highest rate but it's a bit weird putting in another 5.5k into a hacked organization. What do you guys think/why didn't you switch to another bank?
Deal Fanatic
User avatar
Jun 19, 2009
6135 posts
1981 upvotes
Scarborough
dankup wrote: So how many of you stayed with Peoples Trust even after the hacking? I'm just looking for the highest rate but it's a bit weird putting in another 5.5k into a hacked organization. What do you guys think/why didn't you switch to another bank?
I left after the incident. I'm just going to invest it in my portfolio since there's no where else to put it, and yield is the same if not better.
Deal Addict
Aug 28, 2010
1300 posts
365 upvotes
Toronto
dankup wrote: So how many of you stayed with Peoples Trust even after the hacking? I'm just looking for the highest rate but it's a bit weird putting in another 5.5k into a hacked organization. What do you guys think/why didn't you switch to another bank?
I may just ride it out until they lower their interest rate. My info is already stolen, realistically wont matter where the money is I think.
Deal Fanatic
User avatar
Jun 19, 2009
6135 posts
1981 upvotes
Scarborough
porchemasi wrote: I may just ride it out until they lower their interest rate. My info is already stolen, realistically wont matter where the money is I think.
It's not about the money (for me). It's about the principal and willingly taking my business elsewhere as a symbol that this kind of thing shouldn't be tolerated.
Deal Fanatic
Jul 8, 2010
7578 posts
576 upvotes
York
SkimGuy wrote: It's not about the money (for me). It's about the principal and willingly taking my business elsewhere as a symbol that this kind of thing shouldn't be tolerated.
Agreed and that was my message taking my money out of a Scotia account and into PT TFSA. I'm at a point where I can't tolerate any risk, and we want the best bang for our buck so..
Deal Addict
Dec 8, 2008
1887 posts
225 upvotes
GTA
I stupidly over contributed $14,000 this year, but took it out the very same day after realizing... This would result in $140 fine I believe. Had anyone ever been able to get their overcontribution penalty waived by writing cra a letter? I find it rather annoying that it's not prorated.. Gah.
Moderator
User avatar
Mar 23, 2004
47725 posts
13890 upvotes
Markham
leoben wrote: I stupidly over contributed $14,000 this year, but took it out the very same day after realizing... This would result in $140 fine I believe. Had anyone ever been able to get their overcontribution penalty waived by writing cra a letter? I find it rather annoying that it's not prorated.. Gah.
you should be fine since you withdraw on the same day.
Member
Apr 22, 2010
321 posts
9 upvotes
If I do the "Transfer" option on TD and take out all of my money from my TFSA into my regular savings, will that count as a withdrawal?
Sr. Member
User avatar
Jul 13, 2009
926 posts
186 upvotes
I get charged with these transfer fees only if I transfer from TFSA to TFSA right? If I choose to withdraw the money in my CIBC TFSA to my chequing account with CIBC or ask for a snail mail cheque, I avoid the $100 fee? Or is the $100 every time I move money out of the TFSA (even $1)?
Thanks.
Newbie
Sep 13, 2013
43 posts
33 upvotes
Vancouver, BC
[QUOTE]Or is the $100 every time I move money out of the TFSA (even $1)?[/QUOTE]

- CIBC will charge you $100 fee only if you transfer your TFSA account to another financial institution or if you withdraw full amount and close your CIBC TSFA account.
- If you move money from TFSA to your chequing account it will count as a withdrawal and there should be at least 1 free withdrawal per month.
- You must have a minimum deposit on your TFSA account to keep it active and to avoid transfer/closure fee (not sure about CIBC but it's $50 at CDF).
Sr. Member
User avatar
Jul 13, 2009
926 posts
186 upvotes
burjui wrote: - CIBC will charge you $100 fee only if you transfer your TFSA account to another financial institution or if you withdraw full amount and close your CIBC TSFA account.
- If you move money from TFSA to your chequing account it will count as a withdrawal and there should be at least 1 free withdrawal per month.
- You must have a minimum deposit on your TFSA account to keep it active and to avoid transfer/closure fee (not sure about CIBC but it's $50 at CDF).
Are those restrictions for CIBC or it applies to the others too (CDF, CTFS, etc)? I just used CIBC cause $100 seemed insane. The fee cancels out the interest gained and probably lost money too.
How/why people still use the big banks? At least go with one that has higher rates...
Thanks.

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