If you currently have a Tax Free Savings Account (TFSA) at a financial institution but you would prefer to have it somewhere else, the good news is that you are able to transfer it; The bad news is that most (if not all) financial institutions will charge you a transfer out fee ranging from $50 to $100.
There are ways that you can avoid this transfer out fee. Check out the tips below to see if one of these will work for you.
Withdraw from your TFSA instead of doing a transfer out
The best way for you to avoid this fee is to simply do a withdrawal from your current TFSA right before the end of December. Most financial institutions won’t charge you a fee for withdrawing the funds and you will be able to contribute everything you have withdrawn as early as January 1st of the following year into the TFSA at your financial institution of choice. So, rather than pay the transfer out fee, you can completely bypass it by doing a withdrawal.
Open a second TFSA
Another way to bypass the transfer out fee is to simply keep your existing TFSA and open another one at your new financial institution. As long as you stay within your TFSA contribution limits, you are allowed to have more than one TFSA open at any given time. Remember, every calendar year you get a brand new $5000 of contribution room (which will be indexed for inflation eventually), so if you open a new one, you know that in the new year you can contribute to it even if you have already maximized your contributions for this year.
Ask the new financial institution to cover the fee
If you want to transfer out your TFSA rather than following the other suggestions above, another option is to ask your new financial institution whether or not they would be willing to cover the transfer out fee. They are certainly not obligated to do so, but sometimes they might in order to win over your loyalty and more of your business. So, it definitely doesn’t hurt to ask.
You definitely have options so make sure you understand how much it will cost you if you do transfer your TFSA to another institution. Make sure it makes sense for you to do this and whenever possible try to avoid unnecessary bank fees.