Manulife TFSA

Manulife TFSA Overview

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Are you saving to become a homeowner or to achieve a future financial goal? The Manulife TFSA offers a nice opportunity to save and earn a high-interest rate while paying zero tax on your savings. This helps you reach your target amount faster.

Manulife TFSA is a tax-free savings account that allows you to save funds annually and withdraw them at any time you feel ready. The annual contribution limit is $6,500.

However, the annual cumulative balance depends on how much you’ve saved or withdrawn in previous years. If you don’t meet up the annual contribution limit, it can be moved forward to the following year. You also get to choose from two tax-free investment options.

If you want to open a Manulife task-free savings account in Canada, this article is for you. You’d be making an informed decision as we’d guide you through the account features, pros and cons, and more.

Features of Manulife TFSA

Here’s what you get when you open this savings account:

Zero taxes on savings
High-interest rate on savings
$6,500 annual savings limit as of 2023
$88,000 cumulative contribution limit as of 2023
No investment limit on the Tax-free Advantage Account
$2,500 investment limit on the Tax-free Guaranteed Investment Certificates (GICs) Account
Withdrawals on GICs before maturity attract charges
$0 Maintenance charges.

Pros of Manulife TFSA

This account is great, but to help you understand its benefits, we explained them below. Here is an outline of the pros of the Manulife TFSA.

Withdraw Funds At Your Convenience

You can withdraw from your savings at any time. When you do this, the amount withdrawn will be added to your contribution limit for the following year.

Grow Your Savings Faster

You can opt for an investment that grows your savings faster. On the Manulife TFSA, you have the tax-free Advantage Account and the Guaranteed Investment Certificates Account.

The former gives you a 2.10% interest rate, while the latter gives you a whopping 4% interest rate. Whichever one you choose, you’ll get to increase your savings faster.

Pay No Maintenance Fees

There are no maintenance fees on this account. However, if you have a GIC account, you’d pay some charges on withdrawals before investment maturity.

Enjoy Investment Options

This is another perk that you get to enjoy on this account. You can choose from the two investment options available, which are the GICc account and the tax-free Advantage account.

Increase Subsequent Contribution Limit With Withdrawals

When you need funds and have to withdraw from your savings, the amount is carried forward to the contribution limit of the subsequent year. This way, you can meet up with your target savings and achieve your financial goal.

Enjoy Compounded Interest on Locked Investment Annually

Locked investment helps you increase your savings faster. This is because locked funds accumulate compounded interest that is calculated annually and added to your savings.

Cons of Manulife TFSA

Withdrawal Charges on GICs Account

One of the downsides of this account that you need to be aware of is that there are withdrawal charges on GICs. Your investment in this account is tax-free. Also, it attracts charges when you cash out before maturation. You should also note that this charge is dependent on the expenses of recovery fees and market value.

Fees of Manulife TFSA

There are no maintenance fees on a Manulife TFSA. The entire process, from account opening to saving funds in your account and making withdrawals, doesn’t attract any charges. However, if you open a GICs account, you’d pay fees when you cash out before investment maturity.

Special Offers

Looking for special offers? Who isn’t? Well, there are no special offers on this account other than the high-interest rates. However, you’d enjoy a 2.10% interest rate on a Tax-free Advantage account and a 4% interest rate on a Tax-free GICs account.

Other Manulife Account Options

Other Manulife accounts that may appear to you if this TFSA isn’t your choice are as follows:

Manulife Combined High-interest Savings and Chequing Account

Manulife US Dollar High-interest Savings Account

Manulife All-in Banking Package

How to Open the Manulife TFSA Account

Here is a step-by-step guide on how to open this account, but you have to be 18 years of age or older.

The first step is to own an account with Manulife. To do this, you need to reside in Canada, then request an advisor on the bank’s website.
Next, you’d be required to email the postal code of your area to the bank.
Once you have an account, log into Manulife online banking and click on ‘Open a TFSA’. You’d find this in the left-side column.
The next step is to answer a few questions correctly, and your account will be ready in seconds.

Manulife TFSA conclusion

Whether you want a 1–5-year or a 6-year TFSA, you can withdraw from your funds before the completion of the term. Do note that there are withdrawal charges on GICs investments that don’t apply to the Tax-Free Advantage account.

However, if you are looking for a Manulife TFSA with the highest interest rate, then the GICs should be your choice.

FAQs about the Manulife TFSA

Are savings in a TFSA tax deductible?

No. Savings in a TFSA are not tax deductible. You do not have to worry about filling out your accumulated contribution as part of your income for tax returns. All your savings and the interest they accumulate are free of tax.

What happens if I exceed my savings limit on my Manulife TFSA?

You might unintentionally contribute over the stipulated limit or make some withdrawals and re-contribute the amount before the following year. Either way, you've exceeded the savings limit and would be penalized by paying a 1% tax monthly on the extra contribution.

What is the difference between a TFSA and an RRSP?

There are two major differences between the TFSA and the registered retirement savings plan (RRSP). One is that your TFSA is tax-free, while the RRSP is taxable only at the time of withdrawal. The second is that there is a savings limit on TFSAs that doesn't apply to RRSPs.