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hi

quick question re: contribution room for a TFSA

I currently park some savings in a high interest ING account, and was considering putting a bunch into a TFSA with them @ 3% (my current high interest account is around 1.2%)

If I were to contribute 10k to the ING account, then at a later date open a self directed account with someone else, could I then remove that 10k from ING, and effectively gain 10k contribution room for the self directed account?

I know that at some point I will want to go self-directed, but currently the savings are just sitting there and I thought why not grab onto the higher interest rate in the meantime?

thanks muchly
 

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A cash withdrawal from an existing TFSA will generate new contribution room (with certain exceptions) but theoretically* you can’t access that new contribution room until the beginning of the following calendar year ... so if you take the cash withdrawal from ING in late December 2010, you can deposit it to your SD account in early January 2011 ... but if you take the cash withdrawal from ING in January 2011, you’d then have to wait until January 2012 to redeposit it into the SD account.

*I say theoretically because although the gov’t has consistently presented the TFSA that way, I am not convinced that the language of the law actually supports that mechanism.

An alternative to the above method is to make a direct transfer ... much like transferring between RRSPs, you’d get the receiving institution to initiate the transfer, and because the money never lands in your hands, you don’t have to wait til the beginning of the next year.
 
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