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How to Withdraw From a TFSA

Since their introduction in 2009, tax-free savings accounts (TFSAs) have been a popular way for Canadians to save and invest for their future – and for good reason. Like their older relative, registered retirement savings plans (RRSPs), TFSAs allow anyone who is 18 and up to save and invest money while providing tax benefits that help their savings grow. 

However, TFSAs provide much more flexibility than RRSPs; withdrawing money is much easier and cost-effective. So, you might be wondering: How do I get money from my TFSA? We’ll get to that. But, first, let’s take a closer look at how TFSAs work and whether or not withdrawing from yours is the right choice.

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What is a TFSA?


Tax-free savings accounts are investment accounts that can hold various investment types such as stocks, bonds, cash, mutual funds, GICs, and others. Unlike RRSPs, contributions to TFSAs aren’t tax deductible; however, any amount contributed, as well as all income earned in interest within the account grows tax-free. Withdrawals are also tax-free. 

TFSAs can be used for long-, medium-, or short-term savings due to the fact that withdrawals are permitted, without penalty. You can manage your own TFSA – you can choose which investments to hold within them and make your own deposits – or have a financial advisor manage one for you. 

Many Canadians use TFSAs as an alternative to, or in addition to, RRSPs for retirement investing. One reason for this is that, similar to RRSPs, TFSAs have contribution limits – meaning individuals can only deposit so much into a TFSA each year. Let’s take a look at contribution limits and how they work.


What are TFSA limits?


There is a set amount each individual can contribute to their TFSA each year. It’s important to understand TFSA deposit limits because if an investor goes over their contribution limit, they will have to pay a penalty.

Limits are increased each year and unused portions carry over. The contribution room starts in the year an investor turns 18 and accumulates every year after that.


  • The annual TFSA limit for the years 2009 to 2012 was $5,000.
  • The annual TFSA limit for the years 2013 to 2014 was $5,500.
  • The annual TFSA limit for 2015 was $10,000.
  • The annual TFSA limit for the years 2016 to 2018 was $5,500.
  • The annual TFSA limit for the years 2019 to 2022 was $6,000.


To quickly and easily find your available contribution room, you can use's TFSA limit calculator. You can also log into your CRA account online or call the Tax Information Phone Service at 1-800-267-6999. You can also use these services to find out information about all your contributions and withdrawals.


How to withdraw from your TFSA


Generally speaking, there are no TFSA withdrawal rules. Account-holders are permitted to withdraw from their TFSA at any point in time and for whatever reason. 

The types of investments held within an account could impact the time it takes to access funds, however. 

For example, stocks held within a TFSA must first be traded before cash can be accessed. It will likely take a few days to a week for those stocks to be sold and the cash to become accessible.

You can contact your financial institution, either by phone or online, to initiate a withdrawal.

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Why you might want to withdraw from your TFSA 


Perhaps you require funds for the down payment on a home. You might want to use the funds for other investments -- such as cryptocurrency purchases, investing in a business -- or to pay for school. 


Why you shouldn’t withdraw from a TFSA


Emergencies certainly qualify, such as if you require the money to pay bills or to cover your rent or mortgage. You may also want to access the funds to pay back debt, especially if the interest rate on your debt is higher than the interest earned by the investments in your TFSA. 

However, you might not want to withdraw from a TFSA if you’re at your contribution limit and might want to re-contribute the amount you’ve withdrawn within that year. 

Withdrawing from your TFSA will also lower your investment amount within the account, meaning you’ll earn less interest if you withdraw funds. 

Withdrawals made from a TFSA will only be added back as contribution room at the beginning of the year following the withdrawal. 


How to transfer a TFSA from one account to another


You might also be wondering how to transfer funds from a TFSA from one financial institution to another. This is possible and it doesn’t count as a withdrawal; that means your contribution room won’t be impacted. 

Each financial institution has its own transfer form you can use to move a TFSA. Check out your provider’s website for more information or give them a call. Chances are a representative will be more than happy to help you transfer funds over to their bank or investment firm.

In fact, sometimes you can enter in your old details with your new holder and they’ll handle the transfer on your behalf. 

However, be sure not to withdraw from your TFSA to put into a new TFSA because your contribution room will get used up. So, make sure it’s a transfer, otherwise, you could face penalties.

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The bottom line


There are some reasons you might want to withdraw from your TFSA. However, there are some reasons you might want to avoid it. Speak with your financial provider or investment manager to understand any potential tax implications and how a withdrawal will affect your contribution limits and overall financial goals.



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