Can I transfer my tax-free savings account?
I have a debit order of R350 per month that goes into a tax-free savings account (TFSA), as well as ad hoc payments when extra money is available. The fees I am paying are much higher than TFSAs provided by 22seven or EasyEquities, for example.
Can I transfer to these less expensive options and still keep my contributions ring-fenced as taxfree?
City Press replies:
Our investigations found that there is still some confusion around the transfer status of TFSAs.
While it was envisaged that transfers would be able to take place from March 1, Treasury has informed City Press that the final regulations have not yet been passed, but that it hopes to do so within the next few weeks.
It would still take the industry about six months after the issuing of the regulations to put the necessary mechanisms in place.
Treasury made it clear that only direct transfers between product providers would be considered as a legitimate transfer.
Until the mechanisms are in place, the best course would be to open a new TFSA with the lower cost provider and transfer your monthly debit order and future contributions to the new account, but to leave your existing funds in place until there is certainty around the mechanism to transfer.
Once the mechanisms are in place, you can transfer the balance to your new fund.
You do not want to be in a position where you withdraw your money with the intention of transferring to a new product provider only to discover that it has reduced your lifetime savings limit.