New Tax Free Savings Accounts (TFSA) | Tax Free Savings Accounts | Discussion forum

The online banks will not charge a fee to transfer money in and out of a TFSA. It will be just like transferring money between your online bank account and your linked "bricks and mortar" bank account. You are also not limited to just one TFSA. You can open up as many accounts as you like, provided the total of all the account balances does not exceed the yearly contribution limit (which is currently $5000). The government will hit you with a penalty tax if you exceed the max contribution.

You are not "locked in" with a TFSA. You can withdraw funds whenever you like for whatever reason you like, just with a regular savings account. The only difference is that when you withdraw funds, you can't put them back in again until the following year.

I've signed up with PC Financial's TFSA. They offer 3.75% interest beginning January 1, 2009 (you can't transfer money to the account until then). ING has a promotion where you open up an account that pays double the durrent interest rate until January 1, at which point ING converts the account to a TFSA for you. The idea is that doubling the interest rate will pay the taxes otherwise owing on the interest before the account is converted to a TFSA.

I know that ICICI and People's Trust are not offering TFSAs.

Is the money in TFSA part of the CDIC insurance 100K max.??

or it is separate account for 100K ..20years from now...

A few comments on the previous posts:
- The transfer fees relate to direct transfers between different financial institutions, just as are in place for RRSPs or other accounts today.
- The CDIC $100k insurance limit applies to cash and GICs held at a single institution, and in fact an individuals can qualify multiple times based on different types of accounts held at that institution(1)Basic=chequing,savings,etc; 2)=Joint, 3)=RRSP,..) The new TFSA will fall into the basic category.
- Although this forum is for high interest savings, remember that a TFSA is an account type which can hold many different types of instruments depending on the institution. These can include cash, GICs, stocks, bonds, mutual funds,etc.
When considering how to use the limited amount of contribution room available ($5000/year initially), you should consider more than just cash. Remember that no matter what the gain on the investment (interest, dividends, capital gains), it will not be taxable. As such you should consider using your room for the investment which will gain the most, which is not necessarily a simple high interest cash account. e.g. corporate bonds today yield 6% or more.
- Remember also that the quoted interest rates are all "subject to change". Given the major drop in the Bank of Canada rate, I think we can expect those rates to drop noticeably in the near future.
- All of this needs to be considered, because once you contribute to a TFSA at an institution, any withdrawals cannot be put back in until the following year. This flexibility is great, but it requires consideration.

I've notice alot of the banks are offering a 3.75% interest on the TFSA's, but this is only for a few months. Then how do we know what the interest rate will be after that?