Personal Finance

TFSA interest & contribution room question

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  • Oct 8th, 2013 11:49 pm
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Deal Addict
Dec 7, 2011
3586 posts
1993 upvotes
Whitehorse

TFSA interest & contribution room question

Hi,

the Revenue Canada website wasn't helpful with this one: I have two TFSA accounts. Account A was opened in March and filled with the entire available contribution room. Account B used to have money in it, but was emptied in December 2012, with only the interest earned remaining. (I took all my earlier contributions out.) The interest that stayed behing is a low three digit amount, lets say $195.

January 1st, 2014, I expect to get new contribution room of $5.500.

If I close account B on December 30 and take a $195 cash payout, can I contribute to account A on January 2, 2014, $5.695 or only $5.500?

The examples on the Revenue Canada website do not deal with interested earned.

Thank you.
7 replies
Deal Addict
Oct 21, 2012
1436 posts
498 upvotes
Toronto
$5695 but I would remove money sooner to give yourself a cushion.
Member
User avatar
Jan 29, 2007
374 posts
33 upvotes
Yes, you can put back ALL withdrawals that you take out one year the following year(s). The only limit is on new contributions every year.

This means that if you invested $5500 in 2013 and it (miraculously) grew to $20000 and you took it all out in 2013, you could put back $25500 in 2014 (ignoring all previous years for this example), no problem.
Deal Expert
Mar 25, 2005
22706 posts
3697 upvotes
Interest withdrawn is simply added back to your limit on Jan 1.
Member
Sep 10, 2012
274 posts
39 upvotes
You should also be able to arrange a transfer from Account B to Account A so it never leaves the TFSA.
Deal Addict
Apr 12, 2008
1833 posts
1624 upvotes
Kaylya wrote: You should also be able to arrange a transfer from Account B to Account A so it never leaves the TFSA.
Make sure to check if there are any transfer fees first. If there is, might as well withdraw it yourself as it's almost 2014.
Member
Mar 31, 2013
396 posts
84 upvotes
Toronto
Kaylya wrote: You should also be able to arrange a transfer from Account B to Account A so it never leaves the TFSA.
Yes, I have done this with a TFSA. It was close to year end so I was considering withdrawing the money in December, then contributing to the new account in January, but I just went with a transfer instead. There were no fees for me to do this, but I went from a Scotiabank account to a Scotia iTrade account, so that may be why fees didn't apply to me.

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