Penalized for a TFSA Overcontribution

[greenmangoes]

For those of you who can afford to save a few pennies... I didn't even know there were penalties 😞 http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/penalized-for-a-tf...

[photosalp]

Years ago I had a driver working for me who thought he was getting an income tax refund. Then his accountant added in the interest the driver had earned on his savings account and he ended up paying back. Now he's married and has kids. No more silly problems like earning interest on savings account.

[2011limey1]

"Mr. Tesluk is a 63-year-old former IT guy in the financial services industry" ---------------------------------------------------------------------------------------------------------------------------- This one seems strange to me - Mr. Tesluk works for a finance co! It's so very well advertised about how much you can contribute to a TFSA, what happens if you withdraw, etc. Looks like no homework was done.

[2011limey1]

Sorry for the discombulation or whatever with my replies. As many of you know, my computer is acting up! and when posted doesn't look at all like my post - no paragraphs, etc. etc.

[pierrelebel]

"Looks like no homework was done"

I think that is the problem with most cases of overcontribution. Folks do not read the "fine print".  In addition, the first year of the program, banking staff did not really and fully understand the rules. Now they do.

[davca.8je2v]

In addition, the first year of the program, banking staff did not really and fully understand the rules. Now they do.

Really?

The latest numbers, presented in a Canadian Press story this week, show that 54,700 or so taxpayers were contacted by the CRA about overcontributions in the 2013 tax year

apparently  the staff working at the banks of some 54,700 people still do not understand the rules.

[pierrelebel]

"Really?"

Yes, really!

[davca.8je2v]

Well looks like there are some 54,700 people that apparently got the wrong advice from their bank and let them over contribute that would disagree with you. 

[pierrelebel]

Your post seems to assume that all 54,700 taxpayers (down very substantially from 2009) who received a letter from CRA received bad advice from the bank.

We all know the meaning of the word "assume".

[davca.8je2v]

yes and your ASSUMING that banks know everything!!

ANY bank that takes more than the MAXIMUM allowed should be asking "are you sure you have the room" Much like they ask when you buy RRSP's . Apparently they are not!

[davca.8je2v]

In addition, the first year of the program, banking staff did not really and fully understand the rules. Now they do.

apparently it is OK for you to ASSUME that the Banks now know the rules 100% and that their are NEVER any new employees that do not understand the rules.

Nice to think your that important. Wrong but at least important.

[lpwasy]

Yes a lot of people were penalized.  In many cases it was not for a simple over-contribution. 

As I understand it people who had made a withdrawal put the money back in the same year as the withdrawal.

This is a NO-NO as you must wait until the next year to put money back in. 

[davca.8je2v]

As I understand it people who had made a withdrawal put the money back in the same year as the withdrawal.

This is a NO-NO as you must wait until the next year to put money back in.

That cannot be true as according to Pierrelebel  the banks know all the rules and therefore would never let something like that happen as all deposits and withdrawals from these account involve a bank agent doing the paperwork for it.

[valve37]

A useful TFSA strategy if you have a nonregistered account with stocks, bonds and mutual funds etc is a direct transfer in kind to your TFSA. It can be for the total allowed contribution or a portion thereof. If there are gains in the transferred investments then you must report them on your income tax return. If there are losses you cannot carry them forward to offset future gains in the non registered account. I've used this strategy extensively transferring monthly income investments to my TFSA in order to get them out from under the tax man. Transfers from registered accounts such as your RRSP or RRIF are not allowed.

[gad_zukes_ca]

That cannot be true as according to Pierrelebel  the banks know all the rules and therefore would never let something like that happen as all deposits and withdrawals from these account involve a bank agent doing the paperwork for it.

Wow, what is up with your over-reaction?

Your comments and attack on Pierre is way over the top and unwarranted.

And incidentally, many folks make contributions online through self-directed investment accounts, like myself, which could account for folks not receiving advice from banks on when they were over-contributing to TFSAs.

My suggestion: lay off the coffee and have a Snickers, mate!

[2014sportsterguy]

You can't handle the truth.....continue with your sandbox play.