Putting money into a TFSA is a great way to save up for retirement. Knowing the regulations that control when and how contributions and withdrawals work will help you avoid any penalties and fees that can apply in certain circumstances. For example, if you change banks, simply taking the money out of the TFSA at your old institution and depositing it with your new could cost you. There are procedures for how to transfer the TFSA funds without penalty, but they must be followed.

Key Takeaways:

• TFSA deposits reduce your TFSA room, and withdrawals increase it but the catch is that this doesn’t apply for withdrawals until the subsequent year. If you recontribute early, you may be penalized.
• Financial institutions have their own transfer forms to transfer a TFSA from one institution to another, and doing it this way means there are no tax forms to file with the CRA.
• You may be able to transfer your investments “in-kind” between institutions, but not all investments are eligible.

“Understanding the ins and outs of Tax Free Savings Account (TFSA) contributions and withdrawals is important to maximize TFSA room, increase tax-free growth, and avoid fees and penalties. “

Read more: https://www.moneysense.ca/save/whats-the-best-time-to-transfer-a-tfsa-between-institutions/