A lot of people I talk to have their TFSA sitting at the bank. Usually it’s a savings account or a GIC, paying around 2%.
That’s not a disaster. But it’s also not what the account is for, especially if you won’t touch that money for 10 or 20 years. (If that money is actually your safety net, that’s a different job, and I wrote about how much you really need in an emergency fund.)
Here’s the thing most people don’t know: how you move it matters more than when. Do it the wrong way and CRA can treat it as a brand-new contribution. Do it the right way and it’s a non-event.
Let’s break it down.
Why does 2% hurt more than it looks?
Inflation in Canada was 3.1% in September. So money earning about 2% is quietly losing purchasing power every year, even inside a tax-free account.
The TFSA’s real superpower is that growth is never taxed. If the money only earns 2%, there isn’t much growth to protect. That’s it.
(Still deciding which account should get your money in the first place? Start with TFSA vs RRSP: Which Should You Use First?)
What’s the right way to move a TFSA?
A few things to know:
- Open the new TFSA first. At the brokerage you want to use: Wealthsimple, Questrade, your bank’s discount brokerage, whatever fits you.
- Ask the receiving institution to do a direct transfer. You don’t call your bank and take the money out. The new place pulls it over for you, and a direct transfer doesn’t touch your contribution room.
- Never withdraw and re-deposit it yourself. CRA counts that re-deposit as a new contribution. If it goes over your room, the excess is taxed at 1% per month until it’s fixed. Withdrawals do come back as room, but only on January 1 of the next year.
- Expect it to take a while. Usually one to four weeks.
If you’re in Québec, your bank will call these the CELI, REER and CELIAPP. Same idea: match the account type and use a direct transfer. And never withdraw a REER to move it, that’s taxable.
What about transfer fees?
Banks often charge somewhere around $50 to $150 to move an account out. A lot of brokerages will reimburse it, but the rules differ:
- Questrade: covers transfer-out fees up to $150 per account, with no minimum.
- Wealthsimple: reimburses one fee per $25,000 transferred, with a $25,000 minimum, and the account has to stay funded for 90 days.
So if your TFSA is under $25,000, ask before you pick. It’s a five-minute question that can save you up to $150.
What if it’s a GIC?
This is where people get stuck. Most GICs can’t move before they mature. They transfer as cash on the maturity date.
What I’d do:
- Find the maturity date.
- Ask the receiving brokerage to request the transfer about 4 to 6 weeks before it matures.
- Tell your bank you don’t want it to renew automatically.
Some banks will let you move a locked GIC early, TFSA to TFSA, but you usually give up all the interest you’ve earned on it. Sometimes waiting a few months is the better deal.
What I Personally Do
I’ve been there. When I was young, I opened my TFSA and started putting in $50 a month, until I had about $2,000 in there. Cool, right? Except it was all sitting in cash, not doing anything. Then it hit me: all that time, I could have been investing it and earning the 8% or so the market does over the long term. The saving habit was right. Where the money was sitting was wrong.
Once the cash lands, I like to keep it simple. For money you won’t need for 10+ years, a low-cost all-in-one ETF does the job: thousands of companies, one ticket, fees around 0.2%.
The question isn’t which fund is “best.” It’s whether you can sit through a bad year. In early 2020 a 100% stock all-in-one fund fell about 16% in three months. In 2022 it was down about 11% for the year. If a drop like that would make you sell, an 80/20 version with some bonds is the gentler choice. If you could leave it alone, the all-equity one fits a long horizon.
And the 8% a year people talk about? That’s a long-run average, not a promise. Some years are much better, some are much worse. Honestly, the less you stare at it, the easier it gets, which is the best thing about investing for the long term.
The best time to fix a sleepy TFSA is before the next contribution, not after.
You don’t need to time the market. You just need to get the plumbing right:
- New account first
- Direct transfer, never a withdrawal
- Watch the GIC date
- Ask about the fee
Then let it compound. You’ve got this.
“Where is your TFSA sitting right now, and do you actually know what it’s earning? Log in tonight, find the number, and decide if it’s doing the job you need it to do.”
Related Reads:
- TFSA vs RRSP: Which Should You Use First?
- Emergency Funds: How Much Do You Really Need in 2025?
- The Best Thing About Value Investing: You Don’t Have to Watch Your Account
This post is general education, not personalized financial, tax, or investment advice, and nothing here is a recommendation to buy a specific fund. Your TFSA room, your fees, and the right investment depend on your own situation. Check your room in your CRA account (and cross-check it with your own records), and confirm fees with both institutions before you move anything.
