If you withdraw from a TFSA and re-deposit the funds into another TFSA, you may trigger an accidental over-contribution. Withdrawals from a TFSA can’t be contributed to another or the same TFSA in the same year. You must have unused TFSA contribution room before the amount can be re-contributed to your TFSA. Alternatively, you can wait until the beginning of the following year to recontribute – at this point, the amount you withdrew is added back to your TFSA contribution room.
However, let’s say you wanted to stay invested in a TFSA, and you wanted to move your investments from one financial institution to another. In this case, you can ask the receiving financial institution to complete a direct transfer on your behalf. A direct transfer means that your issuer would transfer your TFSA directly to your desired financial institutions. If the transfer is not done directly, you risk incurring tax penalties.
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