Saw this on ING this morning.. Any thoughts.. Has anybody tried this?
2013 TFSA Kick Start Account
The amount Canadians can save tax-free increases by $5,000 each year. This means that you'll have another $5,000 in tax-free savings available on January 1, 2013. So if your TFSA is already at its maximum for 2012, and you're patient, you can contribute more in January 2013. But what if you don't want to wait? Good news - you don't have to.
How the TFSA Kick Start Account works:
Open a 2013 TFSA Kick Start Account and earn 1.35% interest on the money you save there. The TFSA Kick Start Account is not a registered tax-free savings account, but will enable you to put money aside for your 2013 TFSA contribution.
On January 1, 2013, we'll take the total amount of interest you've earned in your Kick Start Account, and we'll double it! Since the most you can put in a TFSA for the year-without getting penalized-is $5,000, any interest earned above this amount will be deposited into your Investment Savings Account (ISA). If you don't already have an ISA, we'll open one up for you automatically.
We'll also deposit the 2013 contribution saved up in your 2013 TFSA Kick Start Account (up to $5,000) into your ING DIRECT Tax-Free Investment Savings Account, registered with the Canada Revenue Agency.
Remember, the money you deposit into your TFSA Kick Start Account will go towards your 2013 TFSA contribution. It will be kept separate from your current TFSA until January 1, 2013 to make sure it doesn't get counted as a 2012 contribution.
Stuff our lawyers make us say:
Offer valid from October 1, 2012 to December 31, 2012 and cannot be combined with any other offer (with the exception of Refer a Friend bonus offers for new Clients). Limit of one Account per person and one Bonus per Account. Interest is calculated daily and paid monthly. Rates, like the weather, are subject to change. Regardless of the amount you put into your TFSA Kick Start Account, we will transfer those funds to your TFSA on January 1, 2013. If the balance in your 2013 TFSA Kick Start Account is greater than $5,000 on January 1, 2013, ING DIRECT will transfer up to $5,000 into your Tax-Free Investment Savings Account. This is to help ensure that your Tax-Free Investment Savings Account does not exceed the maximum limit allowed by Canada Revenue Agency for 2013. Any remaining money will be transferred to your primary Investment Savings Account on January 1, 2013. If you do not have an Investment Savings Account, we will open one for you automatically. Taxes paid on interest earned may vary and are based on your personal tax bracket.
Savings Account and GIC rates are annualized and are current as of today's date and are subject to change without notice. Interest is calculated daily and paid monthly in the case of our Savings Accounts; and is calculated daily and paid at maturity on a GIC.
Have done this for last 3 years and it works great. Interest is paid monthly to the deferred account. We max our deposit at $5k. On Dec 31 the interest is paid X 2 into our ISA. On January 1st the $5k is added to our existing TFSA and the deferred account is automatically closed...
On a sad note, ING's interest rates lost competitiveness some time ago and they have done nothing but lip service so far to get out of the bottom of the pack. Their sell out to Scotiabank I fear will only makes things worse over time.
If there is no turn around soone we are moving our money out.
I've also done this since the KickStart's inception. It's true, and it works. But I'm not doing it this year.
Unfortunately, three months at 2.7% (not 2.75 - who's doing that math?) just isn't worth suffering through 1.35% for the rest of the year. Oh, yes, I could do a formal transfer in January after payout, but that's a hassle with real-world application forms and 15-day delays, not worth it for a difference of .7% on $5000 for 3 months. (5000*0.07=$35 a year, or $8.75 in 3 months, comparing the 2.7% to the 2% available elsewhere.)
At least ING never charges a withdrawal fee.