Looking for a TFSA answer

Murray20c8

Murray20c8

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My head spins when I read the answer to this. I need clarification.
I have a 2024 TFSA limit of $2000.00 and a 2025 TFSA limit of (7k + 2K) $9000.00
I have $6000.00 of dividend cash in my TFSA account.
If I withdraw the $6000.00 from my TFSA will I still have a 2025 TFSA limit of $9000.00 next year?
I believe so, but I can't get a clear answer from the Interweb.
Thanks for info.
 
Murray20c8 said:
My head spins when I read the answer to this. I need clarification.
I have a 2024 TFSA limit of $2000.00 and a 2025 TFSA limit of (7k + 2K) $9000.00
I have $6000.00 of dividend cash in my TFSA account.
If I withdraw the $6000.00 from my TFSA will I still have a 2025 TFSA limit of $9000.00 next year?
I believe so, but I can't get a clear answer from the Interweb.
Thanks for info.
Click to expand...

TFSA Rules You Need To Know​


First things first: a tax-free savings account (TFSA) doesn’t actually need to be a savings account. We’re not sure who decided to call it that, but we prefer to think of a TFSA as a basket for saving or investing. You can pick what to put in your “basket” from an array of options — exchange-traded funds, guaranteed investment certificates, stocks, bonds, and, yes, actual savings. Whatever you choose, any gains you make from the investments in that basket are tax-free. That’s the beauty of a TFSA.
What’s that, you say? That sounds too good to be true? Well, it’s not. And there is no catch. But like anything the government creates, there are rules. Lots of them. Below are the ones that we think are the most important. Follow them, and let the TFSA bliss begin.

TFSA Contribution Rules​

The maximum amount of money you can deposit into your TFSA each year currently stands at $7,000. This figure is called your TFSA contribution room. Thankfully, the total amount that you contribute is cumulative. This means that any unused contribution room will carry over from one year to the next, so the amount you can add to a TFSA will go up each year, regardless of whether or not you deposit money.
What if you never started a TFSA and want to catch up? There’s good news there too. Provided you were eligible and at least 18 years old in 2009 – the first year the TFSA was available — you could be able to contribute a grand total of $95,000. That’s the current lifetime maximum for a TFSA, as of 2024. If you already have a TFSA and have never taken out any money, you can keep adding to your account up until you hit that limit. And if you’ve withdrawn money from your TFSA in the past, you’ll get that room back. You just have to wait until the following year. So, for example, if you withdrew $10,000 from your TFSA in 2023 to use as part of a down payment on a home, assuming you are caught up on your TFSA contributions, you will be able to deposit $17,000 in 2024 — the $10,000 you borrowed from yourself, plus the $7,000 annual limit.
At any time over the course of a calendar year, if you contribute more than your allowable TFSA contribution room, you will be officially “over-contributing” to your TFSA, and you will be subject to a tax equal to 1% of the highest excess TFSA amount for each month that the excess amount remains in your account. So don’t do that.
 
Rruuff Day said:

TFSA Rules You Need To Know​


First things first: a tax-free savings account (TFSA) doesn’t actually need to be a savings account. We’re not sure who decided to call it that, but we prefer to think of a TFSA as a basket for saving or investing. You can pick what to put in your “basket” from an array of options — exchange-traded funds, guaranteed investment certificates, stocks, bonds, and, yes, actual savings. Whatever you choose, any gains you make from the investments in that basket are tax-free. That’s the beauty of a TFSA.
What’s that, you say? That sounds too good to be true? Well, it’s not. And there is no catch. But like anything the government creates, there are rules. Lots of them. Below are the ones that we think are the most important. Follow them, and let the TFSA bliss begin.

TFSA Contribution Rules​

The maximum amount of money you can deposit into your TFSA each year currently stands at $7,000. This figure is called your TFSA contribution room. Thankfully, the total amount that you contribute is cumulative. This means that any unused contribution room will carry over from one year to the next, so the amount you can add to a TFSA will go up each year, regardless of whether or not you deposit money.
What if you never started a TFSA and want to catch up? There’s good news there too. Provided you were eligible and at least 18 years old in 2009 – the first year the TFSA was available — you could be able to contribute a grand total of $95,000. That’s the current lifetime maximum for a TFSA, as of 2024. If you already have a TFSA and have never taken out any money, you can keep adding to your account up until you hit that limit. And if you’ve withdrawn money from your TFSA in the past, you’ll get that room back. You just have to wait until the following year. So, for example, if you withdrew $10,000 from your TFSA in 2023 to use as part of a down payment on a home, assuming you are caught up on your TFSA contributions, you will be able to deposit $17,000 in 2024 — the $10,000 you borrowed from yourself, plus the $7,000 annual limit.
At any time over the course of a calendar year, if you contribute more than your allowable TFSA contribution room, you will be officially “over-contributing” to your TFSA, and you will be subject to a tax equal to 1% of the highest excess TFSA amount for each month that the excess amount remains in your account. So don’t do that.
Click to expand...
So the one word answer that I was looking for, is "Yes". LOL.
Thanks Rruuff.
 
With the caveat not financial advice etc etc, if you take cash out this year, you can put it back next year. You need to be very careful to not over contribute (ie, withdrawal/re-deposit in same year).

Making or replacing withdrawals from a TFSA - Canada.ca

You can withdraw from your Tax-Free Savings Account (TFSA) at any time and for any reason, with no tax consequences.
www.canada.ca www.canada.ca

“Withdrawals …made from your TFSA in the year will only be added back to your TFSA contribution room at the beginning of the following year.”
 
aaron.c said:
With the caveat not financial advice etc etc, if you take cash out this year, you can put it back next year. You need to be very careful to not over contribute (ie, withdrawal/re-deposit in same year).

Making or replacing withdrawals from a TFSA - Canada.ca

You can withdraw from your Tax-Free Savings Account (TFSA) at any time and for any reason, with no tax consequences.
www.canada.ca www.canada.ca

“Withdrawals …made from your TFSA in the year will only be added back to your TFSA contribution room at the beginning of the following year.”
Click to expand...
Ya, I'm paranoid about doing just that. TFSA info is always a year behind on the CRA website.
 
One more thing about TFSA’s…..
If you have listed a beneficiary of the account should you die, the money is paid out tax free and the account is closed. If, however, you assign a “successor holder” to the account, the account stays open and can still earn interest, dividends, gains in value(stocks), all tax free. A successor holder can be a spouse or common law partner only. The benefit is the account stays active and never attracts tax implications. This can be a two way street if both you and your significant other each have TFSA’s. The only caveat is the contribution room going forward is limited to whatever the successor holder is qualified to have for the given year.
 
Murray20c8 said:
Ya, I'm paranoid about doing just that. TFSA info is always a year behind on the CRA website.
Click to expand...
If you do accidentally over contribute they nail you 1% per month. Until the excess amount is removed and you have to file form RC243 . And that’s why one should keep accurate records. But how many do ,lol. Mine was just, unbelievably, updated after over two years of being out to lunch.
 

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