TSFA confusion

[George The Curious]

I am already maxed out on my TSFA contribution limit.
I took out $2000 from TSFA for an emergency expense. I transferred $2000 back in after 2 weeks after I got more money. Does this make me over the limit contribution for the year and penalized with 1% / month interest?
What if I take the $2000 out again? will it remedy it?

 

[toguy5252]

I am already maxed out on my TSFA contribution limit.
I took out $2000 from TSFA for an emergency expense. I transferred $2000 back in after 2 weeks after I got more money. Does this make me over the limit contribution for the year and penalized with 1% / month interest?
What if I take the $2000 out again? will it remedy it?

Unfortunately i think you have a problem. as soon as you put the money back in you were over your limit. I do not think taking it out cures the problem. But you should consult a professional

 

[saxon]

I believe you have to wait till the next year to put the money back in that you withdrew to avoid over contribution.

 

[danmand]

I believe you have to wait till the next year to put the money back in that you withdrew to avoid over contribution.

I believe that is correct

 

[George The Curious]

I believe you have to wait till the next year to put the money back in that you withdrew to avoid over contribution.

Yes, I know that. But I already put back in by error. The question is if I take it out again, will it remedy the problem (ie. not get charged interest).

 

[smitherz]

Yes if you take that amount back out you won't incur further penalties, but you do have to pay penalty for the time period the excess amount sat there.
Best to follow up with your financial institution after , apparently it's common for the penalties to erroneously continue even after withdrawal.

 

[explorerzip]

The feds likely put the condition where you cannot replace money you withdraw from a TFSA in the same calendar year just to trip people up on purpose. The TFSA is stupid with so many restrictions IMO.

 

[hungry]

I saw an article in the paper recently about this happening a lot. It said, if you contact they feds, they will almost always waive the charges for the first offence. Tell them it was an honest mistake and contact your financial institution.

 

[Keebler Elf]

If you already put in $5,500 (the annual limit) for 2014 and then you withdrew and put money back in then you're over the contribution limit and will be penalized. They often waive the penalty for the first offense.

 

[canchi]

Call the FI that make the deposit for you, ask them to reverse it ASAP, if wasn't done too long ago, you might get the fee charges waived.
And if you have it all with the same place and they didn't let you know about it when you deposit the extra, and if you end up getting charge with the fee, (or penalty), ask the place to pay for it (or at least some) as they should know that it will incur a fee (or penalty)

 

[explorerzip]

The Feds are not stupid in this case. The tfsa is a very useful adjunct to encourage people to save for a rainy day. It looks like the op used it for the intended purpose. Some people max out their rrsp contributions and tfsa is a great way to build capital and collect dividend income without capital gains taxes.

It's simply the fact that the op and other people getting tripped up should have figured this stuff out before hand. Like the CRA website is clear as day with concrete examples on what you can and can't do. The trick is you have to actually spend five minutes reading it.

The consequences of withdrawing and putting back money could be better communicated by the CRA or the banks. Obviously, the message isn't getting out for some reason.

 

[freestuff]

Take the money that you OVER-contributed out ASAP since you are incurring a penalty while that money stays in your TFSA.

 

[thecuriousgeorge]

I had put $5K in...took out $4K for 2 days and put back the $4K....i was charged about $400 in fees for depositing $9K into a TSFA at the end of the yr (more than the interest earned)....i closed all accounts and left RBC for not explaining the process or reversing the fees...i told them i didn't need to take the money out from this account but it was easier for me to make a transfer from and to the same bank before i pulled out the cash...they said no prob.....there was no forgiveness after..they made me pay the full fine...so i left the bank

Morale...only do $5K in for a fiscal yr.....regardless of balance

 

[needinit]

I am already maxed out on my TSFA contribution limit.
I took out $2000 from TSFA for an emergency expense. I transferred $2000 back in after 2 weeks after I got more money. Does this make me over the limit contribution for the year and penalized with 1% / month interest?
What if I take the $2000 out again? will it remedy it?

Yes, you need to take the over contribution back out, otherwise you are charged the penalty...that withdrawal does not count towards your contribution limit next year. See the CRA link:

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/txtn/txtn-eng.html

 

[GPIDEAL]

The Feds are not stupid in this case. The tfsa is a very useful adjunct to encourage people to save for a rainy day. It looks like the op used it for the intended purpose. Some people max out their rrsp contributions and tfsa is a great way to build capital and collect dividend income without capital gains taxes.

It's simply the fact that the op and other people getting tripped up should have figured this stuff out before hand. Like the CRA website is clear as day with concrete examples on what you can and can't do. The trick is you have to actually spend five minutes reading it.

Without ANY income taxes, no?

 

[GPIDEAL]

I had put $5K in...took out $4K for 2 days and put back the $4K....i was charged about $400 in fees for depositing $9K into a TSFA at the end of the yr (more than the interest earned)....i closed all accounts and left RBC for not explaining the process or reversing the fees...i told them i didn't need to take the money out from this account but it was easier for me to make a transfer from and to the same bank before i pulled out the cash...they said no prob.....there was no forgiveness after..they made me pay the full fine...so i left the bank

Morale...only do $5K in for a fiscal yr.....regardless of balance

As someone already stated, it's now $5,500 for 2014.

I would agree with your complaint that the bank didn't warn you. WTF!

 

[Keebler Elf]

I would agree with your complain that the bank didn't warn you. WTF!

If you believe that. I find it hard to believe. Probably more like the OP wasn't listening, didn't understand, or forgot (or some combination of the three).

 

[George The Curious]

If you believe that. I find it hard to believe. Probably more like the OP wasn't listening, didn't understand, or forgot (or some combination of the three).

George and I are curious about other more important things I life than remembering all the boring tax details.

 

[GPIDEAL]

If you believe that. I find it hard to believe. Probably more like the OP wasn't listening, didn't understand, or forgot (or some combination of the three).

My boss transferred his RRSP funds held in a segregated insurance fund and the broker didn't tell him he'd pay a lot in fees (I don't know why because he could've persuaded him to stay).

 

[Keebler Elf]

George and I are curious about other more important things I life than remembering all the boring tax details.

Maybe. But even a dummy knows there are contribution limits that you should be checking before making a deposit.