Transferring Money Between Registered Accounts
|The Questrade homepage. Unlike other discount brokerages,|
there are no limits to which ETFs are free to buy.
As most of you know, the way a TFSA works is that the government grants you contribution room each year to deposit money in these accounts. Any room you do not use gets carried over to future years. If you withdraw money from a TFSA, you need to wait until the next year to get the contribution room back. If you take out $5,000 today, assuming you maxed out your TFSA contributions, you will not be able to deposit the money until January 1, 2015.
If I took the money out of the Tangerine account directly, I wouldn't have been able to deposit the full $8,000 into the Questrade account until January 1, 2015. That's missing growth from compounding interest for approximately 6 months.
Fortunately, there is an alternative. The government allows transfers between your own TFSA accounts as long as the financial institution that holds your account initiates the transfer. Basically, you just fill out a form that details the information of your current TFSA account and the details of the new TFSA account and send that to the financial institution where you want to transfer the funds. They will handle the rest.
In this case, I went online to the Questrade website, entered the information on the form, and they supplied me with a filled in form to mail back to them. According to their website, the transfer would take 4-6 weeks. The transfer was completed last week, for a total of 28 days or 4 weeks. Not bad. Of course, going online to read other people's experiences with Questrade is a little frightening. I'd advise against it. My experience with Questrade thus far has been pleasant.
The same rules apply to money in RRSP accounts. Except if you withdraw the money, you will get taxed at the source, the money withdrawn is considered income (since money deposited reduces your net income for the year), and you never get the contribution room back. I've done a few RRSP transfers in the past. Now that Questrade successfully completed the TFSA transfer, I will do some more transfers with my RRSP accounts.
*Questrade is also offering rewards to referrals. Essentially, $25 for each referral. $50 bonus for every third one. The person being referred also gets a bonus depends on how much they fund in their account. The person has 90 days to fund the account and receive the appropriate bonus. There are also codes online that allow for $50 in free trades. A simple Google search will find such codes.