Do you know what your TFSA limit is for 2018?
A TFSA, aka Tax-Free Savings Account, is an investment product that lets your money grow and accumulate tax-free. That means you don’t pay taxes on the money you make inside your TFSA, such as interest, dividends and capital gains.
Your TFSA limit determines how much you can deposit into your TFSA accounts each year. And fortunately, it’s not a “use it or lose it” situation – this limit accumulates over time if you don’t use it.
For 2018, the annual limit is $5,500 and the cumulative limit is $57,500.
|Year||TFSA annual limit||TFSA cumulative limit|
So what does that mean for you?
1) If you don’t have any TFSAs, then you can contribute the full cumulative limit of $57,500 in 2018.
2) If you have TFSAs and haven’t withdrawn from them this year, then in 2018 you can contribute the cumulative limit of $57,500 minus the amount you’ve already contributed.
Example: If you currently have $10,000 in TFSAs, you would be able to contribute up to $47,500 this year ($57,500 – $10,000 = $47,500).
3) If you have TFSAs and have withdrawn from them this year, then you can contribute the cumulative limit of $57,500 minus the amount you’ve already contributed and minus the amount you withdrew this year.
Example: If you currently have $10,000 in TFSAs and withdrew $2,000 from your TFSAs this year, you would be able to contribute up to $45,500 this year ($57,500 – $10,000 – $2,000 = $45,500). You would get the $2,000 back in contribution room next year.
There are a range of TFSA options available to meet the needs of different investors, including savings accounts, term deposits, mutual funds, stocks and bonds.
As always, we recommend that you talk to your financial institution to get more specific advice. You can talk to a financial planner at Vancity about options relating to your specific situation. Not a Vancity member? Join us.
- Advice from Grandma on the RRSP and TFSA
- RRSP vs TFSA: Which is better?
- Why you should care about compound interest