Q and A: Can I have more than one Tax Free Savings Account? With different institutions?

Question:

Can I have more than one Tax Free Savings Account? With different institutions?

Answer:

Yes, you can have more than one Tax Free Savings Account (TFSA), with different institutions. You must be careful not exceed your maximum contribution limit however, and this can be more difficult if your TFSA funds are spread out between different accounts.

TFSAs have now been available for 9 years – they started in 2009. If you have never contributed to a TFSA before, you could now contribute a maximum of $52,000. Since you are also permitted to withdraw funds from a TFSA and re-deposit them again the following calendar year, it can become confusing to track your contributions and contribution room.

Penalties for over-contributing to a TFSA are steep.The Canada Revenue Agency (CRA) charges a 1% tax on your highest excess TFSA amount for each month you are over-contributed. For example, if you contributed $2,000 too much to your TFSA in January and withdrew the $2,000 excess contribution in September of the same year, you would owe $180 tax on your excess contributions (because you would be over contributed by $2,000 for 9 months of the year).

You can find your TFSA contribution room on the CRA website or by calling CRA, but the information is not always up-to-date for the previous year until the middle of the following year. Your RGF advisor can help you track your TFSA contribution room, but if you have more than one TFSA, the chance of errors increases greatly.