T2033 | Financial Crooks

ING Direct, now called Tangerine, spent a great deal of money mailing me an ad recently asking me to open a TFSA Kick Start Account. Should I? For those who didn’t get the ad, here’s the offer:

You put up to $5500, the maximum new contribution to a TFSA for 2104, into a special savings account at ~~ING Direct~~ Tangerine.
You earn the regular daily interest rate (currently 1.35%) on that money until the end of December 31.
They will add up how much interest you earned till the end of December 31, and double it.
On January 1, 2014 ~~ING Direct~~ Tangerine will automatically contribute up to the maximum of $5500 of the money and interest in your special savings account to your ~~ING Direct~~ Tangerine TFSA.
If there is more than $5500 in the account, the extra (in other words the interest) will be deposited into your regular ~~ING Direct~~ Tangerine savings account. That’s because you can’t contribute more than $5500 to your TFSA in 2014 unless you have unused contribution room from previous years which ~~ING Direct~~ Tangerine has no way to know about.
If you don’t have a regular ~~ING Direct~~ Tangerine savings account, they will automatically create one for you.

How Much Money Could I Make from an ING Direct Tangerine TFSA Kick Start Account?

What is it with you readers and money? Don’t you want to do this just to make ING happy?

Ah well. Say you had put the entire $5500 maximum 2014 TFSA new contribution into an ~~ING Direct~~ Tangerine TFSA Kick Start account on October 1, 2013. Say ~~ING Direct~~ Tangerine keeps the current interest rate of 1.35% until January 1, 2014. (Which is pretty likely: their rates don’t change often.) For one year at 1.35%, $5500 would earn about $74.75 in interest. For 3 months, it would earn about $18.58. (There’s a nice calculator on the ~~ING Direct~~ Tangerine website, if you want to play: https://www.tangerine.ca/en/calculators/calculators.html#isa. Putting your money into this TFSA Kick Start account earns you the regular interest that you would get anyway on your money PLUS it doubles the interest earned to the end of December 31 just before it transfers the money into your TFSA account. That means if you put in the full $5500 on October 1, 2013, you would earn about $18.58 more than if you didn’t open a Kick Start account.

You can see that’s not a lot of money! However, around here, that’s enough money for 2 of us to go for dim sum including tax but not including tip. Or for all 4 of us to have a hefty lunch at home. And it’s “found money” because it doesn’t cost us anything to get it. So we’re going ahead and opening a Kick Start account.

UPDATE: Please be aware that as of January 2015, Tangerine has started charging a fee if you transfer your RRSP or TFSA from Tangerine to another bank, credit union, brokerage or financial institution.

Given that change, I would no longer recommend the Kick Start program unless you plan to keep your TFSA money at Tangerine for the long term.

Other Advantages of an ING Direct Tangerine TFSA Kick Start Account and Tangerine TFSAs

It’s incredibly easy to contribute. If you already have the money in another ~~ING Direct~~ Tangerine account, in about 2 minutes you can complete the entire process, including reading all the legal terms and conditions. (You DO read all those legal things before you click “I accept” don’t you?!)

For a Ready-Cash TFSA

If you are investing your TFSA in a daily interest savings account because you need the cash readily and quickly available, ~~ING Direct~~ Tangerine’s Tax Free Investment Savings Account offers a reasonable rate of interest. As of October 4, 2013, it is paying 1.35% per year. (Some trust companies, however, are paying 3% a year.)

For a “Couch Potato Equities and Bonds Mutual Fund” TFSA

If you are going to invest your TFSA money in a “couch potato” mutual fund manner, you can invest at ~~ING Direct~~ Tangerine in their Streetwise funds. According to the Canadian Couch Potato (Read: the One Fund Solution) this is a reasonable choice.

For a GIC-Only TFSA

If you are ultra-conservative and only want to invest your TFSA in GICs, you could do so within your ~~ING Direct~~ Tangerine TFSA. The drawback is that their GIC rates are not as good as those you can get within a self-directed brokerage account at BMO InvestorLine, or even Investor’s Edge which does not offer as good a selection as InvestorLine. If you have enough money in your TFSA to avoid paying any annual fee for a TFSA account at InvestorLine or Investor’s Edge, you may want to consider opening an account there. You don’t have to buy stocks to use a brokerage account. For example, today, October 4, 2013, the TFSA GIC rate

at ~~ING Direct~~ Tangerine for a one-year term is 1.35% and
for a 5-year term is 2.25%.

(Note: the TFSA daily interest savings rate is 1.4% so don’t buy a one year GIC unless you really expect rates to drop!) The best TFSA GIC rate at InvestorLine today

for a one-year term is 1.96% from Home Trust and
for a 5-year term is 2.91% from Canadian Tire Bank.

One curious feature of ~~ING Direct~~ Tangerine is they offer GIC “sales” from time to time. For example, on Cyber Monday (the Monday after Black Friday) they often offer a special rate on GICs or other products. During one such sale, I picked up a 3% rate on a GIC, about double their regular rate. It’s worth keeping an eye on your ~~ING Direct~~ Tangerine “flyers.”

Drawbacks of Opening an ING Direct Tangerine TFSA Kick Start Account

Tangerine will start charging a fee in January 2015 to transfer TFSA money to another financial institution.
If you want to move the cash to a self-directed brokerage account TFSA in 2014 you will have to fill out a T2033 for that brokerage in 2014 and send it to ~~ING Direct~~ Tangerine. (Tangerine will require a signed original T2033.)
- For brokerages like Investor’s Edge, you may also have to visit your CIBC branch to get a rep there to send a copy to Wholesale Brokerage Accounts.
- For brokerages like InvestorLine you can just mail it directly yourself.
You will have to wait for the cash to transfer from your ~~ING Direct~~ Tangerine TFSA to your self-directed brokerage account TFSA in 2014.
You might have to pay a fee, if ~~ING Direct~~ Tangerine changes its “no fee” policy between now and the date you make the request to transfer the funds. As of October 4, 2013, ~~ING Direct~~ Tangerine does not charge to transfer funds out of a TFSA. If you want to move the money to a TFSA at another financial institution in 2014. UPDATE: Tangerine will start charging a fee in January 2015.
you will have to wait up to 4 weeks for the money to get transferred. (Although a recent transfer from ~~ING Direct~~ Tangerine to Investor’s Edge took only 12 business days.)

If, like me, you want to go ahead and seize that $18 and change with both hands, here’s how:

How to Set Up a Tangerine TFSA Kick Start Account

Log in to your Tangerine account.
Do NOT click on the big ad that says “Open a 2014 TFSA Kick Start Account. Until they fix it, that link signs you out of your accounts and takes you to a screen for someone who doesn’t bank with Tangerine! (I know because I tried it a few times and I even reported it to their telephone reps.) Instead, click on the tab: Open new account
From the list of six items, click on the Tax-Free Savings Accounts link.
A list of items will appear. Click on Open a 2014 TFSA Kick Start Account
Read the information about how the account will work. Note that on January 1, 2014:
- Up to $5500 from the account will be transferred into your existing Tangerine TFSA account.
- If you have more than $5500 in the account, due to interest, the interest will be deposited into your Investment Savings Account because the maximum new contribution permitted for 2014 is $5500. If you don’t have an ISA they will create one automatically for you.
If you agree with the plan, click on the Next button.
Review your name, address, date of birth and SIN. If they are correct continue.
- In the Amount field type the amount of money you want to contribute today to your TFSA Kick Start account.
- If desired, change the name in the Nickname field to some other name. The default name is 2014 TFSA Contributions.
- From the drop-down list, select which account to withdraw the Amount from. For example, I selected my chequing account.
- The Effective Date is the date the withdrawal will be made. If desired change it to some specific date. I left it at the default of today’s date.
- Answer the Legal questions.
- When you are sure your information is accurate, click on the Next button.
On the next screen, review the details of what you have asked to have happen. If it all looks fine, click on the Go button.
Make a note of your new account number and the confirmation number for your records.
If desired, click on View My Accounts to see if the new TFSA Kick Start account is there. If you funded it from another Tangerine account, it should have your money in it already. If you funded it from an external bank account it may take a business day or two for the funds to show up.
If you are finished banking, click on: Log me out. For added security, clear your browser cache and close your browser session.

The Secret Reason I’m Really Opening a Kick Start TFSA Account

OK, I’ll admit to one more reason (although I really like dim sum.) When TFSAs were first invented, I opened one at Tangerine. I’ve since moved most of the cash out of it, but not all of the money. So I need to do a transfer one of these days soon to clear out the rest of the money and take it over to my brokerage account TFSA. Since I’ll have to fill out a T2033 anyway, I might as well lob in next year’s donation, leave it till January 2, then move the entire amount over and out. Having my 2014 contribution in there will give me the motivation to get it moving.

Given that change, I would no longer recommend the Kick Start program unless you plan to keep your TFSA money at Tangerine for the long term.

Related Reading

Examples of TFSA Portfolio Fees and Commissions Using InvestorLine and Investor’s Edge

Join In
Will you bother to open a TFSA Kick Start Account? What’s your favourite selection when you have dim sum? Please share your views with a comment.

image of thin green double line

We have several long-term GICs with CIBC in an RRSP. We checked and we cannot transfer them directly to our Investor’s Edge account. However, as each of these GICs mature we instruct CIBC to convert them into cash deposited in an RRSP Daily Interest Savings account. Then we can finally move the money into our Investor’s Edge RRSP by completing a T2033 transfer form. Here’s how it works.

First the GICs Must Mature and be Converted to Cash

About 2 weeks before a GIC matures until about 2 weeks after it matures, we can contact our service representative at our CIBC branch to provide instructions. We advise them, in writing, to allow the GIC to mature (not roll-over into a new term) to cash and to deposit the cash in our RRSP Daily Interest Savings account. It would be nice if we could just set these instructions ahead of time, like we can at ING Direct. Unfortunately, we can’t.

A week or two after the GIC matures, cashes and is deposited, CIBC advises us that the money has been deposited in the RRSP DIS account. Then it’s time to move it to Investor’s Edge.

How to Get a T2033 for Investor’s Edge

First we need the T2033 form to request the transfer from our CIBC RRSP to our CIBC Investor’s Edge RRSP. To get the form:

Sign on to your account/s.
1. Go to https://www.investorsedge.cibc.com/ie/index.html
2. In the User ID field, type your User ID.
3. In the Password field, type your password.
4. Click on the Sign On button.
From the list on the left side of the screen, click on the link: Forms Centre
Click on the Transfers tab.
Click on the PDF link for Transfer Authorization for Registered Investments.
On legal paper, print the 4 page form. (You can also pick up this form at any CIBC branch.)
Click on the Sign Off button.
For extra security, close your Browser session

Information Required to Fill Out the T2033 Form to Transfer your RRSP Cash

To fill out the T2033 form to transfer funds from a CIBC RRSP to an Investor’s Edge RRSP you will need to know

Your CIBC branch transit number.

For your contact at that CIBC branch, the person’s

Name, email address, telephone number and extension, and fax number

Your own name; mailing address; social insurance number; date of birth

For your spouse (if applicable):

name; social insurance number

The receiving institution will already be selected if you print the form from the Investor’s Edge website. Otherwise you will need to know it is

CIBC Investor’s Edge (IE) 1 800 567 3343, Dealer Code 9479

Your registered type, RRSP

Your RRSP plan number for your Investor’s Edge account
Your delivering institution
For a daily interest savings account, this will be CIBC Fixed Term Consumer Deposits

For your Registered Type, RRSP,

Your delivering institution is your bank branch and its address
Your Planholder/Annuitant Account Number is the number for your RRSP Daily Interest Savings Account

You will need to decide
If you are transferring the entire amount or a partial amount. If partial, you will need to decide how much.

If there is any further identification available, you can list it in a field for Symbol and/or Certificate or Policy No and you can include an Investment Description.

How to Fill Out the T2033 Form to Transfer your RRSP Cash

At the time this was written, you could not fill out this form online. So you would have to print in the following information:
In the Branch Contact Information section, fill in the

Transit
Contact name
Contact email address
Telephone Number and Extension
Fax Number

In the Client Information section, fill in your

Last Name, First Name and Initials
street Address, City, Province, Postal Code
Social Insurance Number
Date of Birth, in the format first three letters of the month, two numbers for the day, four numbers for the year

If applicable, also fill in your spouse’s

Last Name, First Name, Initials
Social Insurance Number

In the Receiving Institution Information

Be sure that the CIBC Investor’s Edge box is selected.

In the Registered Type section

Select the RRSP box.
In the Plan/Account No. box, fill in the number of your Investor’s Edge RRSP account.

In the Client Instructions to Delivering Institution section

Be sure that the CIBC Fixed Term Consumer Deposits box is selected. (or another choice if appropriate)

In the Registered Type section

Select the RRSP box.
Write the street Address, City, Province, and Postal Code for the branch where your RRSP daily interest account is managed.
In the Plan/Account No. box, fill in the number of your CIBC RRSP account.

In the Transfer Type section,

Select All in-kind or Partial as listed below, as appropriate.
Select the In-Cash and Dollars boxes.
In the Investment Amount field, write how many dollars you want to transfer.
In the Symbol and/or Certificate or Policy No. field, write RRSP DIS (if applicable)
In the Investment Description field, write any other instructions. For example, I wrote: Please transfer 100,000 and leave the balance in the Daily Interest Savings Account. (OK, maybe that’s not totally true.)

In the Client Authorization Section

Date and sign the form.

How to Submit the RRSP Transfer Request

Unlike BMO InvestorLine where you can simply mail in your transfer request, it appears you have to send in the CIBC Investor’s Edge requests by fax to Wholesale Brokerage Operations at 1 800 285 9620 preferably from your CIBC Branch.

To avoid mistakes, we took our request to our Branch Advisor and had her fax it in to Investor’s Edge.

And now we wait. I’ll update this post when the money arrives in the Investor’s Edge account.You may want to get a coffee or something. : )

UPDATE: Ok, I’ve posted the results in: CIBC vs ING Direct to Investor’s Edge RRSP: the Race is On.