TFSA is a tax-free saving account that allows Canadians to save and invest their money without paying tax on the growth.
TFSA offers a great way to save for short- and long-term goals. The contributions are not tax-deductible, and even withdrawals are tax-exempt.
With these many advantages, many people wonder, “can you have more than one TFSA?’. If you are one of the people with this question in mind, this article is for you.
In this article, I answered the question “can you have more than one TFSA?” discussed some benefits and downsides of having multiple accounts, and shared some valuable tips on managing your multiple accounts.
Without skipping a beat, let’s get right into it.
Can You Have More Than One TFSA?
The simple answer to this question is YES.
You can have as many TFSA accounts as you like.
The Canada Revenue Agency (CRA) doesn’t have a restriction for multiple TFSA accounts.
According to the last CRA statistics in 2017, the average number of TFSAs per holder is 1.38, which means many Canadians have more than 2 TFSA accounts.
However, having more than one TFSA account does not give you more contribution room. According to the CRA official website, the total amount you contribute for all your TFSA accounts must not exceed the TFSA contribution room for that year.
Why You Might Consider Having Multiple TFSA
Now that you know it’s possible to have more than one TFSA account, let’s talk about why you might consider opening multiple TFSA accounts.
What benefits can help you decide if you should open more than one TFSA account?
1. Different Saving Goals
One of the reasons why most Canadians open more than one TFSA account is because it lets them save for different purposes.
Suppose you want to save for rainy day funds, a car, a down payment on a house, and your retirement. In that case, you can open one account for each saving purpose and earmark each account for a specific purpose.
With this strategy, you are less likely to dip into the savings meant for something else.
2. Investing in a Product That may be Unavailable
Some Canadians open more than one TFSA account because they want to invest their money in a specific product unavailable within their current TFSA account. This will prompt them to open other TFSA accounts.
For example, suppose you already have a TFSA account with a bank that only offers savings accounts. Along the line, you are interested in buying ETFs, and you see an investment opportunity that you want to seize.
In that case, you will need to open another TFSA account with a different financial institution that will allow you to buy the investment product you are seeking.
Downsides of Having Multiple TFSA
While there are no restrictions to having more than one TFSA, there are a few downsides you may have to consider before you open multiple TFSA accounts.
1. TFSA Contribution Limit
The annual TFSA contribution limit or the total contribution room is not per account held but per individual.
For example, the TFSA contribution limit for 2022 is $6000.
Except you have unused contribution room from past years, your total contributions to all your accounts cannot exceed $6000.
So if you have two separate TFSA accounts, you can contribute $3000 each to both accounts, but if you contribute $6000 to both accounts, you will have to deal with the CRA for over-contribution and pay the penalty tax.
The CRA charges tax equal to 1% of the highest excess TFSA amount in your accounts for each month that the excess money remains in your TFSA accounts.
So if you make an extra contribution of $5000 into any of the two TFSA accounts in that year, a penalty of $50 will be due each month until you withdraw the excess TFSA contribution or the excess contribution is eliminated the following year by the new contribution room.
2. Keeping Track of TFSA Contributions
Knowing that the TFSA contribution limit is not per account but per person, it becomes difficult to keep track of all your TFSA accounts contributions if you have more than one account.
There is the possibility that your contributions might exceed the contribution limit for that year.
Many Canadians with more than one TFSA account have been charged with the 1% penalty and have had to spend long hours on the phone with CRA agents or make complaints in their offices.
Without a sound system to help you track your contributions, things can get confusing and become a nightmare, especially when you are making several contributions to your accounts in different months.
However, there are good TFSA contribution trackers on platforms like Wealthsimple that can help you keep track of all your accounts and your contributions in that year.
With more than one TFSA account comes the possibility of higher investment fees, especially if you have managed accounts and not self-directed investments.
However, your account management fees drop as your balances or deposits increase. This is a benefit you cannot enjoy with multiple TFSA accounts.
For example, Wealthsimple’s 0.50% annual management fees drop to 0.40% when your deposit exceeds $100,000, and you will get additional perks. Even Questrade’s Questwealth Portfolio has a 0.25% annual management fee which drops to 0.20 with assets above the $100,000 mark.
You cannot take advantage of this cost-saving strategy when splitting your TFSA across multiple accounts. Consolidating your accounts at a single provider with lower fees will help you save money on management fees.
Tips For Managing Multiple TFSA
Regardless of the benefits of having more than one TFSA account, managing the accounts can be challenging for most people.
If you already have more than one TFSA account or intend on having more than one TFSA account, here are a few tips that you can employ to manage all your accounts to avoid TFSA penalties.
Use a TFSA contribution tracker: One good way to stay on top of your accounts and ensure you don’t exceed the TFSA contribution limit for the year is to take advantage of the many contribution tracker apps available.
A good contribution tracker will help you keep track of your contributions across your different accounts and financial institutions. These apps will let you see how much contribution room is available to you and track your deposits and withdrawals.
Start your account with a plan: Before you open a new TFSA account, ensure you already have a plan on how much you intend to contribute during the year and how you will use your account.
A plan helps ensure that your TFSA aligns with your financial goals. If there are any changes in your financial situation within the year, you can update your plans accordingly.
Close old accounts: Take another look at all your TFSA accounts and ask yourself why you have them. If there are accounts with brokerages that no longer meets your objectives, you can move out your holdings and close the account.
After all, you can transfer funds between TFSA accounts without any tax implications. So consolidating your accounts into one or a few will save on fees and make tracking easier.
Be intentional with your TFSA accounts: Because there are no restrictions to opening multiple TFSA accounts, opening a new account can be tempting. However, you must be intentional with your plans.
Why do you need to open a new TFSA account? Does having an account align with your goals? Is opening another account the best path toward your financial goals?
The answers to these questions will determine if you need another TFSA account. If not, you should stick with the TFSA you already have.
Have a system in place: Do not contribute randomly to your TFSA accounts. It is advisable to hold all your individual stocks with one brokerage (Wealthsimple Trade) and all your ETFs in another brokerage (Questrade).
This will help you reduce the chances of over-contributing to your TFSA accounts.
Multiple RRSP or RESP Accounts
Just as you can open more than one TFSA account, you can also open more than one RRSP and RESP.
You can open separate RESPs for your kids and multiple RRSPs for your retirement savings.
For example, if you already have a group RRSP through your employer, you can open an additional RRSP to maximize your contribution room.
However, managing multiple RRSPs and RESPs can be challenging, just like managing multiple TFSA accounts.
Ensure you watch out for your available contribution rooms to avoid over-contributing, merge multiple RRSPs and RESPs and close old accounts, and use a contribution tracker to keep track of your contributions.
Related: TFSA vs RRSP: How to Choose?
TFSA Contribution Limit vs. TFSA Contribution Room
The TFSA contribution limit or the TFSA dollar limit for 2022 is $6,000. The annual contribution limit is indexed to inflation.
However, the TFSA contribution room is the maximum amount you can contribute to your TFSA accounts. If you were above 18 in 2009, your TFSA contribution room grows each year, even if you do not open a TFSA or even file an income tax and benefit return.
If you turned 18 after 2009, your TFSA contribution room started the year you turned 18 and accumulated every year after that year.
Your TFSA contribution room is the sum of the TFSA contribution or dollar limit for the year, any unused contribution rooms from past years, and all TFSA withdrawals from previous years.
Final Thoughts on Can You Have More Than One TFSA
TFSA is an effective saving tool that Canadians can use to meet their financial goals.
I have answered your question, “Can you have more than one TFSA?”. I have talked about the benefits, downsides, and how you can manage multiple TFSA accounts.
You can go ahead to open more than one TFSA account if you need to and make the most out of your TFSAs.
FAQs on Can You Have More Than One TFSA
What is the Tax-Free Savings Account limit 2022?
The TFSA contribution or dollar limit is $6,000 for 2022.
How much can I put in my TFSA if I have never contributed?
If you’ve been eligible since 2009 and have never made a contribution, your total unused contribution room for 2022 is $81,500.
How do I know my TFSA contribution room?
The quick and easiest way to check and confirm your TFSA contribution room is by logging in to your MyCRA account or contacting TIPS by phone.
Can I have multiple TFSAs with different banks?
Yes. You can have TFSA accounts at several banks or financial institutions and brokerages. CRA deals with the TFSA limits and not the number of accounts.
Hi, I'm Adeola Adegoke. I am a licensed Insurance Broker in Manitoba, and I hold a master’s degree in Mathematical Sciences (with a major in Financial Modeling) from the African Institute for Mathematical Sciences (AIMS), Tanzania.
Also, I have a second master's degree in Statistics from the University of Regina, and I am currently pursuing my Ph.D. in Statistics at the University of Manitoba.
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