Re-contribution including interest? | Page 2 | Tax Free Savings Accounts | Discussion forum

No, nothing in written rules, but I've had non-TFSA GICs with Oaken in the past and they, like some other fi's, will renew them for another like-term in the absence of any other directions, if I remember correctly, so I'm assuming the same applies for TFSA GICs - especially as the TFSA savings account is not an option with them and I can't see them taking the money out of registered plan status (i.e. make a TFSA withdrawal) without your express instructions, so what else can they do? I'm not saying there's no "limbo" option for a short-while, especially as they want to retain your funds....but why mess with that, either just renew as of maturity date or make sure your instructions are clear as of maturity date.

I think Oaken does address the TFSA maturity situation in their Terms and Conditions for Tax Free Savings Account:

3. Investment Maturity Instructions
You may provide instructions to us to reinvest an Investment at the Investment Maturity Date in accordance with these Terms and Conditions. Where you do not wish to have the proceeds of the Investment reinvested in accordance with section 1 of these Terms and Conditions, you must provide us or your Representative, a completed transfer form at least twenty (20) days prior to the applicable Investment Maturity Date.

4. No Investment Maturity Instructions
If instructions are not received by us in accordance with section 3, the Proceeds realized on an Investment Maturity Date may, at our discretion, be reinvested in another Investment for the same term as the matured Investment at our then prevailing rate of interest for that term, provided that any such reinvestment may be cancelled if the Trustee receives a written request from you to cancel within ten (10) business days from the date of reinvestment. “Proceeds” in the case of a compound interest Investment shall mean the principal amount of the Investment together with all accrued interest in respect of the Investment, and in the case of all other Investments, shall mean only the principal amount of the Investment.

Loonie said
I also wonder if TFSA would be eligible for the one year cashable GIC (cashable after 30 days). If so, that might be another way around the situation of no-savings-option. You could cash the GIC as any other, transfer it immediately, not de-register. They should find that question easier to answer than the one Alain originally posed.  

That would have been a great work around Loonie, but according to the options available on-line, the "1 year cashable GIC" is NOT available for the TFSA (nor RSP, nor RIF).

Another question that I do not have an answer for is the following:

For a TFSA (let`s say 5 years), If I chose "Annual Pay" in the option "Select your interest payment frequency" (annual compound -or- annual pay), will the annual interests deposited in my Saving Account be recognized as TFSA money by the CRA ? In other words, are the Annual Pay interests recognized as TFSA withdrawals ? Obviously, I wish it would be ! Anyone knows the answer ?

I too don't understand why you would want the interest from TFSA to be deposited outside of it unless you want that interest money for living expenses.
Perhaps Bill knows more than I do, but I would want to see the money credited on my transactions within the TFSA first, before withdrawing it from the tfsa.

I am not committed to the limbo theory, but I think there is a difference between a registered plan existing (with funds in it) and one that is invested in something or other. i don't see why it is not technically possible to have the former without the latter. I don't think it requires bending any TFSA rules. I don't think the government requires you to be earning money on it, and certainly doesn't require the banks to offer interest. A year or so ago we were worried that rates could drop to zero. If that had happened, I don't imagine our plans would be automatically de-registered (although there wouldn't be much point in retaining them except as another pocket for CDIC coverage). I think that if Oaken allowed this, they would not want to do it for very long. As we learned from Hubert closing RSPs that had no money in them, it costs the bank money to keep these things open and registered. If the customer is not renewing, there is little hope that the bank is going to make more money off them in future although they may do so temporarily but that is not of much use to them.

Loonie said
... but I would want to see the money credited on my transactions within the TFSA first, before withdrawing it from the tfsa.
 

That is exactly what I want ! But, without a TFSA saving account to put the money in, is this what will happen with Oaken when they will deposit the TFSA interest to the Saving Account ?

Offering a TFSA saving account would make things really clear and simple.

Loonie said
Oh, I see. Your goal, then, is to find a way to defer the withdrawal from the TFSA until the end of the year.

I don't imagine Oaken would be willing to wait that long, so you would need to find a way to get it out of there sooner.

I think we're back to my earlier idea that you should line up a place to transfer it to upon maturity (which means the interest would also be transferred to the new financial institution). Hubert would be a good bet, unless you're in QC. From there, you can take out as much as you want, when you want, and redeposit the next year wherever you want.  

My real goal is to bump-up my TFSA year-after-year. If the TFSA interests are directly deposited in my saving account (because Oaken does not have a TFSA Saving Account), then, I want to make sure that these interests are recorded at CRA as a TFSA withdrawal, which automatically bumps-up my next year TFSA contributions.

AlainJF said

My real goal is to bump-up my TFSA year-after-year.   

So I assume you want to maximize your TFSA return and contribute to a TFSA each year.

Then, take out a GIC with Oaken this year and then, next year take out a new multi year GIC on the same date ... { continuing each year}
If you use this technique , then you can merge multiple GICs on the same maturity date in the future ..

This certainly is not as "clean" as using a TFSA savings account.
However, by using a TFSA Saving account you also lower your Tax Free Yield when you move funds from a higher yield TFSA GIC to a lower yield TFSA savings. You also lose the tax free interest feature when you move funds out of the TFSA.

BTW... You will not be able to withdraw from a TFSA savings with Dec. interest on December 31st because your December interest does is not payable until the end of day on the 31st.

I hope this helps,

Wayno

You have a specific Oaken process question ... I would suggest you call them directly.

Loonie said
You seem to think that Oaken would treat the interest separately from the principal, i.e. that they would put the interest directly into your non-registered savings account. Unclear what you think they would do with the principal.
 

If I chose the option "Annual Pay" (interest versed "annually", not "at maturity").

Original question I wrote:
For a TFSA (let`s say 5 years), If I chose "Annual Pay" in the option "Select your interest payment frequency" (annual compound -or- annual pay), will the annual interests deposited in my Saving Account be recognized as TFSA money by the CRA ? In other words, are the Annual Paid interests recognized as TFSA withdrawals ? Obviously, I wish it would be ! Anyone knows the answer ?

Bill said
AlainJF, your link doesn't tell me why you're doing this. As in my $1020 example above, whether you leave the interest in the TFSA, or else take it out in December and put it back in January, you're in exactly the same position!  

Yes, same position in terms of TFSA quantity, but not in terms of movability and rates (if the next years` rates are better). It's really to be able to move the "recognized TFSA money" (just the annual paid interests in that specific case) wherever the best deal is in the next year, and without painful T2033.

Do I want to commit to the next 4 years automatic interests compound at a fix rate if I am almost sure that the rates will go up ? I prefer the flexibility to compound the interests "manually" at a better rate wherever is that better rate ("Annual Pay" option).