Update - clarification to potential penalty situations.
The maximum annual contribution limit to a TFSA is $5000 per year. This makes it a good emergency fund vehicle. If I:
- transfer money out before the new $5000 contribution credit starts for a new year do I have to wait before replacing the money? Or am I subject to the penalty?
- transfer money from one institution to another do I get reported twice to the CRA? In which case am I subject to the penalty?
On what amount do I pay the 1% penalty? Is the formula:
(TOTAL - $5000) * 0.01
(TOTAL - $5000) * n * 0.01 where n is the number of months over