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TFSA Transfer Fee

SkyRider

Banned
Mar 31, 2009
17,572
2
0
I asked Bank "A" to transfer the balance in my TFSA to Bank "B". Bank "A" said they charge a $100 transfer fee. Bank "B" said they do not reimburse trasnfer fees. How do you guys avoid this $100 transfer fee?

I then ask Bank "A" to just give me the money from my TFSA but Bank "B" said I cannot re-contribute the money until 2012 (next year) and it is restrict to $5,000 only.
 

dicktater7

Member
Aug 27, 2010
86
6
8
Hey SkyRider,

The $100.00 transfer fee is quite common with the banks, just another service charge in their long list.

What Bank B told you is correct, any withdrawal from a TFSA cannot be re-invested until the following year. TFSA's were introduced in 2009. Maximum annual contributions per year is $5,000.00 so if someone has never made a contribution to their TFSA to date, they could invest $15,000.00 ( 5 grand for '09,'10,'11)today in one lump sum or any portion of. If one doesn't make their maximum or only makes a partial contribution in any year, that unused contribution room carrys-forward indefinately until used.

It sounds like you have only contributed $5,000.00 to your TFSA so far. If that's the case you could cash out you TFSA, receive the cash or better yet just get them to deposit it into your chequing account, it's less hassle when re-investing at the other bank to write a cheque as they like to see the source of the funds, and re-invest it as a new contribution based on your unused carry-forward room.

If you are not sure what you have contributedin the past, you can refer to your notice of assessment from CRA as they are tracking this info.
 

Stockboy

Member
Apr 13, 2003
154
13
18
Greater Toronto - Golden Horsehoe
Thanks. The $5,000 was contributed in 2010 and is now worth roughly $5,150 including earned interest.
If you cash out the $5,150 this year out of the TFSA. You can put back the $5,150 + $5,000 next year.
I swear to god the Gov't has no clue what they did with the TFSA's. Just eroding their tax base.

Transfer fees for the TFSA's are just like RRSP fees. Bitch loud enough and they will be reversed.
Make sure you have growth vehicles in your TFSA's.
Good luck!
 

SkyRider

Banned
Mar 31, 2009
17,572
2
0
Thanks Stockboy. Looks like the only way to avoid the $100 transfer fee (other than bitching for a waiver) is to withdraw the money and then re-contibute the $5,150 the following year.
 
B

burt-oh-my!

What is the point in transferring from one BANK to another anyhow? Are you gaining a half percent? You should be INVESTING your TFSA, not putting it in a bank. The tax savings on interest income in this low-interest rate environment are minimal.
 

SkyRider

Banned
Mar 31, 2009
17,572
2
0
What is the point in transferring from one BANK to another anyhow? Are you gaining a half percent? You should be INVESTING your TFSA, not putting it in a bank. The tax savings on interest income in this low-interest rate environment are minimal.
The problem with INVESTING is that one could lose some or all of one's money and I assume the losses are not tax-deductible.
 
B

burt-oh-my!

The problem with INVESTING is that one could lose some or all of one's money and I assume the losses are not tax-deductible.
If you are just sticking with GICs/bank accounts then you should certainly not move it. Your tax savings compared to an ordinary non-registered account is 2.5% interest (let's say) for $15,000 (3 years of TFSA contributions) is $425 interest*.4(tax rate assumption) = around $170 per year. You lose over half of your tax savings by moving.

Withdraw it in late December, then re-deposit it Jan 1 into Bank B
 

Tony2Tap

Swollen Member
Aug 13, 2003
112
0
0
A little to the West of Centre
Thanks. The $5,000 was contributed in 2010 and is now worth roughly $5,150 including earned interest.
You can contribute $5000 for 2009 (Assuming you have not) and $5000 for 2011. If you withdraw the 5,150 this and then put it back in, you would still have 4850 for this year and 10150 for next year. As burt says, the best is to withdraw the end of Dec.
 

Keebler Elf

The Original Elf
Aug 31, 2001
14,572
203
63
The Keebler Factory
Keep in mind that this is only a problem if you're at your contribution limit for the year already. If you're not, just withdraw the funds and then deposit them into the other TFSA account.

I ran into the transfer fee issue this year but I wasn't at my limit so it wasn't a problem (PC Financial wanted $50 to transfer, which I thought is excessive). I've transferred the money from my PC TFSA account to my PC chequing account, will withdraw the money, and then deposit into my other bank's TFSA account.

For a newb, it really is pretty convoluted.

Is there an easy way to find out what your current contribution limit is at any given time? Perhaps on your account on the CRA website?
 
B

burt-oh-my!

Geez, the calculations are pretty damn simple really. You can put in $5k per year, anything you take out you can put back in the following year along with another $5k.
 
B

burt-oh-my!

Anyone know the rationale for forcing you to wait until the following year before you can put the money back in a TFSA?
I don't know, but I for one am glad, otherwisse the keeping track truly would become out of control. If you can't keep it in for a year then don't put it in in the first place. If they allowed unlimited withdrawals and re-contributions the record-keeping truly WOULD become silly.
 

alb

Member
Dec 20, 2010
445
0
16
Anyone know the rationale for forcing you to wait until the following year before you can put the money back in a TFSA?
Like the RRSP's, TFSA's have very restrictive rules. Government acutually wants to encourage people save for the long term (for retirement) hence by having this rule or restiction in place does just that. The whole reason the government put this new TFSA saving tool in place is because they know when people retire that even if they have RRSP's it still may not be enough in most cases because of the huge taxes one will pay once they start drawing an income from the RRSP. On the otherhand with the TFSA there is no tax on the growth and NO tax on the withdrawal which makes this very appealing for long term investors. If you want to save for a trip or something shorterm don't invest in a TFSA because the rules are restrictive To really benefit from a TFSA one needs to treat it as a long term investment that is when you can really reap the rewards and pay NO TAX on all the growth in the account in the future.
 

SkyRider

Banned
Mar 31, 2009
17,572
2
0
Thanks to everybody. I was thinking of transferring my TFSA from one bank to another bank to take advantage of the other bank's higher interest rate but the $100 transfer fee killed that idea.
 
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