Can cash be transferred "in kind"?
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Thread: Can cash be transferred "in kind"?

  1. #1
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    Can cash be transferred "in kind"?

    I'm helping a friend with a TFSA question.

    He has a company TFSA plan that holds Sunlife mutual funds. He wants to move everything to his new TD Waterhouse TFSA.

    However Sunlife says these are 'special' funds and cannot be transferred in-kind. They would have to be redeemed and transferred as cash.

    Question:
    Would the cash transfer be deemed a contribution by CRA? This would be a huge problem.
    Or can cash be transferred "in-kind"?

    I guess my question simplifies to: Can cash be transferred from one TFSA institution to another without penalty?

    Last edited by dotnet_nerd; 2017-01-03 at 03:44 PM.

  2. #2
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    Never mind, I found an answer. As long as the issuer does the transfer there's no impact on contribution room.

    http://www.cra-arc.gc.ca/tx/ndvdls/t...rs/wn-eng.html

  3. #3
    Senior Member Beaver101's Avatar
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    ^ The answer you found or "As long as the issuer does the transfer there's no impact on contribution room." seems to contradict your "Question: Would the cash transfer be deemed a contribution by CRA? This would be a huge problem."
    Everyone should be respected as an individual, but no one idolized.-A. Einstein

  4. #4
    Senior Member GreatLaker's Avatar
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    Correct. The registered transfer form will have a section to specify transfer in-kind or in-cash. If the transfer in cash is specified then the financial institution transferring out will sell the securities. Or you can name specific securities to transfer in-kind and the rest in cash. But in this case just specify in cash.

    Here is a sample form:
    https://www.td.com/ca/document/PDF/forms/595172.pdf
    Invest your time actively and your money passively.

  5. #5
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    Quote Originally Posted by dotnet_nerd View Post
    I'm helping a friend with a TFSA question.

    He has a company TFSA plan that holds Sunlife mutual funds. He wants to move everything to his new TD Waterhouse TFSA.
    However Sunlife says these are 'special' funds and cannot be transferred in-kind. They would have to be redeemed and transferred as cash.
    Anything that the receiving TFSA account does not have access to will not be able to be transferred "in-kind", or probably a better way to think about it is "as-is".


    Quote Originally Posted by dotnet_nerd View Post
    Question:
    Would the cash transfer be deemed a contribution by CRA? This would be a huge problem.
    If it makes it way out of a TFSA, into a taxable account then is added back into a TFSA, then yes.
    If the paperwork is filed to correctly identify that this is a TFSA to TFSA transfer, then no.

    Another thing to watch out for is whether there is a TFSA transfer fee or closing fee. I have seen some posts where people have elected to wait until mid to end of Dec to withdraw as the withdrawal is free but a transfer/closing fee is charged.


    Quote Originally Posted by dotnet_nerd View Post
    Or can cash be transferred "in-kind"?
    I'd have to check but the RRSP forms I used for a similar transfer (RRSP to RRSP) let one use "in-kind" for what one could transfer as shares/units/GICS and "in-cash" for the investments that had to be converted to cash before transfer.


    Quote Originally Posted by dotnet_nerd View Post
    I guess my question simplifies to: Can cash be transferred from one TFSA institution to another without penalty?
    Yes ... the form may let him direct the investments to be liquidated so that only cash is transferred.


    Cheers

  6. #6
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    Another note to your friend - if he does the transfer in-kind he could be subject to a tax liability if it is moving from a non registered account to a registered.

  7. #7
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    Quote Originally Posted by redsgomarching View Post
    Another note to your friend - if he does the transfer in-kind he could be subject to a tax liability if it is moving from a non registered account to a registered.
    No, it's employer-run TFSA to Waterhouse TFSA.

  8. #8
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    Quote Originally Posted by dotnet_nerd View Post
    No, it's employer-run TFSA to Waterhouse TFSA.
    Just saw that I missed the company TFSA plan part.

  9. #9
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    Thanks all for your input


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