Since opening her TFSA in 2009, Jenny has contributed the maximum TFSA dollar limit each year. At the end of 2023, she has no TFSA contribution room left. In 2024, Jenny makes a $7,000 contribution, the TFSA dollar limit for 2024. Later that year, she withdraws $3,000 for a trip. Unfortunately, her plans change and she cannot go. There are choices Jenny could make regarding her TFSA withdrawal as described below.
If Jenny wishes to re-contribute part or all of the $3,000 she withdrew, she will have to wait until the beginning of 2025 to do so. The $3,000 will be added to her TFSA contribution room at the beginning of 2025.
If she re-contributes any of the withdrawn amount before 2025, she will have an excess amount in her TFSA and will be charged a tax equal to 1% of the highest excess TFSA amount for each month that the excess stays in her account.
