Canadian High Interest Savings Bank Accounts

is there a limit, or is the max you can deposit is $5000?

Sounds to me like you can save $5000 for every year this plan is in effect (i.e. $5000 in 2009, another $5000 in 2010, etc.). One of my concerns was that it would be difficult to get the money out of the ING account and put it in another Tax-Free Savings Account somewhere else later on (either a mutual fund account or something at another bank), without losing that $5000 contribution room, but it looks like that's not going to be a problem either.

Another page with information on it is located here at the Canada Revenue Agency:

http://www.cra-arc.gc.ca/gncy/bdgt/2008/txfr-eng.html

At this point the page is just a FAQ but since the CRA handles personal taxes in Canada, I'm assuming it's going to become a more detailed and informative page once the real TFSAs come into existence in January.

ING is basically saying that if you start your TFSA saving early, they'll pay you the interest you would have earned if you had the actual TFSA account already. For those of us who have lower annual incomes and therefore pay lower taxes on our income, ING is giving us a nice bonus. Basically this amounts to some of those high-interest account opening bonuses we were seeing a while back from the online banks. I didn't expect to see many of them again this fall, what with the economy being what it is.

Dave
The Shoeless Investor

By the way, just so you know, the rate is not fixed at 3%. It is tied to the ING ISA account rate which may go up or down.

What about all the interest we will have accumulated till the end of the year?

It won't be able to reinvest it in the Tax-Free savings account because it will crush the 5000$ maximum limit. I guess they will just deposit all the interest in our normal acocunts or is it our responsibility to do so?

Isabel Haney said:

But wait – today I signed up for the ING Tax Savings acct, and even though their website advertises 3% interest, at the end of the signing up, just before you say your final "yes go", they tell you that it is only 2.7%. That seems like false advertising I think. I'll leave my money there til the end of the year, but if they don't clean up their act, it will be moving early 2009.

Same for me. As soon as I get my 5.4% interests deposited I transfer back all my money out from ING.

I don't care to not contribute my 5000$ anywhere else because I don't pay taxes at the end of the year, I'm a student

I just signed for the no-tax savings account with ING because of the 6% till January.

Robin,

The term "without penalty" with regards to an inter-bank transfer of an individual's TFSA means you will not be penalized in terms of losing your contribution room for the year. It's not done as a withdrawal but a transfer, as allowed by the CRA and legislation. The financial institution may still, and likely will, charge a fee to transfer a TFSA as there is a lot of paperwork involved much like transferring an RRSP. It's generally a $25 to $50 service charge.

Cheers,
Doug