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TFSA Transfer?
March 12, 2016
5:54 pm
4n2t0
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I'll try to sum it up...

I withdraw $41,000 from TFSA "A" in December 2015 leaving $400 of interest in the account. In January 2016 I contribute $2,000 back to TFSA "A" and $44,500 to TFSA "B" to setup an ETF portfolio, which means I'm max out for 2016. I now want to transfer TFSA "A" to TFSA "B". Does the interest gained in TFSA "A" count towards my contribution limit when transferring TFSA's? I understand interest does not normally count towards the contribution limit but I'm not sure how it applies to transfers.

March 13, 2016
10:16 am
AltaRed
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Transfers between TFSAs have no impact on contribution or withdrawal limits. It is only IF you withdraw from one and then contribute to another do you have recordable withdrawals and contributions. The point being: Fill out a TFSA transfer form and have A transfer you holdings to B.

You should have been able to do that with the original $41000 as well. http://www.cra-arc.gc.ca/tx/nd.....n-eng.html

March 13, 2016
10:39 am
Winnie
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4n2t0 said

I'll try to sum it up...

I withdraw $41,000 from TFSA "A" in December 2015 leaving $400 of interest in the account. In January 2016 I contribute $2,000 back to TFSA "A" and $44,500 to TFSA "B" to setup an ETF portfolio, which means I'm max out for 2016. I now want to transfer TFSA "A" to TFSA "B". Does the interest gained in TFSA "A" count towards my contribution limit when transferring TFSA's? I understand interest does not normally count towards the contribution limit but I'm not sure how it applies to transfers.

Your limit now is $46,900. All interest always count towards the contribution limit.

March 13, 2016
10:54 am
James
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Altared is correct. Transfers are not considered contributions. So, as long as you use the TFSA transfer form, that should be fine. Just remember there may be a fee associated with transferring TFSA to TFSA. You need to do the calculations as to whether that makes sense or not. If it is a brokerage you are transferring to, sometimes they will cover the fee. It pays to ask around.

March 13, 2016
4:39 pm
2of3aintbad
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Winnie said
Your limit now is $46,900. All interest always count towards the contribution limit.

If in December you withdrew $41,000 and left $400, your limit would be $41,000 plus $5500 = $46,500 not $46,900, right?

March 13, 2016
6:10 pm
4n2t0
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2of3aintbad said

Winnie said
Your limit now is $46,900. All interest always count towards the contribution limit.

If in December you withdrew $41,000 and left $400, your limit would be $41,000 plus $5500 = $46,500 not $46,900, right?

Correct.

March 13, 2016
6:11 pm
4n2t0
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James said

Altared is correct. Transfers are not considered contributions. So, as long as you use the TFSA transfer form, that should be fine. Just remember there may be a fee associated with transferring TFSA to TFSA. You need to do the calculations as to whether that makes sense or not. If it is a brokerage you are transferring to, sometimes they will cover the fee. It pays to ask around.

It Peoples Trust to Questrade, so there shouldn't be any fees.

March 13, 2016
6:18 pm
4n2t0
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AltaRed said
You should have been able to do that with the original $41000 as well. http://www.cra-arc.gc.ca/tx/nd.....n-eng.html

I could have but it would have taken too long. It was easier to withdraw at the end of the year and contribute at the start of the new year.

March 13, 2016
6:24 pm
Loonie
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There may be some confusion in some people's minds about contribution limits due to OP having separated out the interest.

Once the money has been deposited in a TFSA in accordance with the contribution limits as specified for initial contributions by CRA, the concepts of contribution limits and interest are not relevant in the same way afterwards. The government has made this unnecessarily confusing by making it illegal to take out money and put it back in the same year.

Basically, what you are allowed to do is:
Contribute the amount prescribed annually by law. You can do this at any time.
You can also take money out at any time, in any amount, as permitted by your particular TFSA plan.
You can replace ANY money that you took out of any TFSA, but you have to wait until at least the following calendar year in which to do so.
You can transfer any amount from any TFSA directly to any other TFSA at any time, as long as you use the required gov't form, without any penalty from the government, although you may incur a fee at the institution from which you are transferring.
Notice that I never mentioned the interest, because it is not relevant.

I hope that helps someone.

March 17, 2016
3:32 pm
SavingIsGood
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Quick update: sent transfer request by snail-mail on 2016.02.24 to Hubert and they forwarded it to Peoples. Today funds were withdrawn from PT and most likely cheque sent to Hubert. Hopefully the whole transfer will complete within a month as Hubert suggested (4-6 weeks).

March 18, 2016
7:26 am
Save2Retire@55
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Two rules would make your calculations much easier:

1. Transfers are not considered contribution no matter what you transfer.
2. Interest is not considered contribution.
3. Contribution is only the $ you yourself add on your TFSA.

For your scenario, as long as you transfer, no need to worry about anything. But if you withdraw then contribute, the interest is going to be considered a fresh contribution.

Hope this helps.

April 14, 2016
10:47 pm
Schrodinger's Ape
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Loonie said You can replace ANY money that you took out of any TFSA, but you have to wait until at least the following calendar year in which to do so.

Wow, that's good to know... I knew you could re-contribute last year's withdrawals, but I guess I always assumed the contribution room would be "capped" at the amounts prescribed by CRA. But re-reading their Contributions page, it certainly doesn't mention any caps. It just says last year's withdrawals are added to your contribution room, without qualification.

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