How to Transfer a TFSA or RRSP to a New Broker Tax-Free
Transferring a TFSA or RRSP to a new broker should cost you a form and a fee. Done the wrong way, it costs a great deal more. The Canada Revenue Agency publishes a worked example of a taxpayer who moved $50,000 of TFSA money herself and ended up paying $500 a month in penalty tax. Pull cash out of an RRSP to move it, and the payer withholds up to 30% before you see a dollar of it, with the whole amount landing on your tax return as income.
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The difference between those outcomes and a clean, tax-free move is a single procedural choice: whether you touch the money or the institutions do. Here is how a direct transfer works, what the CRA’s own example shows about the do-it-yourself version, and what the paperwork looks like on your end.
This piece covers TFSAs and RRSPs. FHSAs, RESPs and non-registered accounts each carry their own transfer rules.
The one rule that matters: the receiving institution starts it
To move funds from one TFSA to another, or from one institution to another, you ask the receiving financial institution to complete a direct transfer, according to the CRA’s guidance on requesting a TFSA transfer. A direct transfer does not affect your TFSA contribution room and avoids tax implications.
RRSPs work on the same principle. The CRA’s wording is blunt: “To make sure that these funds are transferred on a tax-deferred basis, you must ask the payer to transfer the funds directly.” That guidance sits on the agency’s RRSP transferring page.
In practice, you do not call your current broker to close anything. You open the account at the new broker and file the transfer request there. The new broker then goes to the old one, and the assets or cash move between the two institutions without ever passing through your bank account. That last part is what preserves the tax treatment. Timing varies by institution, and chasing the sending side is the receiving broker’s job.
Transferring a TFSA
Most institutions offer three versions of the same move, though the menu varies:
- In-kind transfer. Moves your existing investments as they are, without selling them.
- Cash transfer. Sells your investments first, then transfers the money.
- Partial transfer. Transfers only a portion of your TFSA.
In-kind is usually what you want if you intend to keep your positions, since a cash transfer means selling and then rebuying at whatever price the market offers on the far side. Partial transfers matter when you want to leave part of the account where it is and move only the rest. The CRA also notes that “some financial institutions may charge a fee for processing a transfer.” More on that below.
The trap: withdrawing and recontributing is not a transfer
The CRA’s instruction here leaves no room: “Do not withdraw funds yourself and then contribute them to a different TFSA. This is not a direct transfer and it may have serious tax consequences. The contribution is considered a new contribution.”
That last sentence is the whole problem. A withdrawal does not create contribution room in the year you make it. So when you put the money back somewhere else, the CRA sees a fresh contribution against room you have already used, and every dollar over your limit attracts a tax of 1% per month for as long as the excess sits there.
The agency’s own example, using a taxpayer it calls Alexis, shows the arithmetic:
| Step | What happens | Contribution room after |
|---|---|---|
| 2024 | Alexis, 43, opens a TFSA and contributes the maximum for 2009 through 2024: $95,000 | $0 unused |
| Early 2025 | Contributes $7,000, the 2025 dollar limit | $0 unused |
| April 2025 | Withdraws $50,000 to chase a better rate at another bank | Withdrawal has no effect on 2025 room |
| April 2025 | Contributes that $50,000 to a TFSA at the new bank | $50,000 over-contribution |
The result: a 1% monthly tax on the excess, which is $500 every month until the $50,000 is removed. The room the withdrawal created is added back only in the next calendar year, which does nothing for the months she is being taxed. If the mechanics of how room accumulates, and why it refreshes only each January, are new to you, our guide to how TFSA contribution room works walks through them.
A direct transfer sidesteps all of this because nothing is ever withdrawn and nothing is ever contributed. One further case worth knowing: TFSA assets can move directly between former spouses or common-law partners on a relationship breakdown, provided both are living separate and apart at the time and the transfer is made under a court decree, order or judgement, or a written separation agreement.
Transferring an RRSP
Property from an unmatured RRSP, meaning one that is not yet paying out retirement income, can be transferred directly to an RPP, RRSP, RRIF, PRPP, SPP, ALDA or FHSA, per the CRA’s rules on the subject. Handled directly, the money stays tax-deferred.
It also stays out of the way of your contribution planning. The CRA’s position is that “generally, amounts you transfer directly to your RRSP do not affect your RRSP deduction limit,” which is why a broker move should not disturb the contribution and deduction arithmetic covered in our RRSP guide.
The form for a direct transfer is the T2033, and an RRSP-to-FHSA move uses Form RC720. You will rarely fill either one out yourself. Institutions are not required to use the CRA’s exact forms and may use their own documentation, so long as they confirm the transfer details to you. Treat the paperwork as the brokers’ work, and read what they send back.
One age limit to note: amounts cannot be transferred to an RRSP if you were over 71 at the end of the tax year.
What happens if you take the cash instead
If you receive the payment in cash or by cheque rather than having it transferred directly, you must include the amount in your income for the year, on line 12900, and you cannot transfer it on a tax-deferred basis. There is no undo.
Before that, the payer withholds tax at source. The CRA’s rates on RRSP withdrawals for residents of Canada:
| Amount withdrawn | Withholding rate | Quebec |
|---|---|---|
| Up to $5,000 | 10% | 5% |
| Over $5,000 up to and including $15,000 | 20% | 10% |
| Over $15,000 | 30% | 15% |
Funds held in Quebec also have provincial tax withheld. And the withholding is not a settlement: the CRA cautions that the amount held back may not always be enough to cover the tax you owe at your bracket, so a large withdrawal can generate a further bill at filing.
Set that beside the TFSA case and the contrast is clean. TFSA room that a withdrawal frees up comes back the following calendar year. An RRSP cash-out is income in the year you receive it, full stop.
Fees, and who pays them
Many institutions charge a transfer-out fee when you leave, which is the one real cost of doing this properly.
Some receiving brokers rebate it. Questrade will rebate transfer fees on any account moved in from another financial institution regardless of the balance, to a maximum of $150 per account, with no limit on the number of accounts you bring over. To collect it you submit a statement from your old institution showing the fees you were charged, within 60 days of the transfer request being submitted, per the Questrade pricing page as verified September 5, 2026. One caveat to read before you choose in-kind: for Questwealth accounts, all in-kind and partial transfers of securities are liquidated.
Fee rebates are worth checking wherever you are headed, and they are one input among several. Commissions, the account types supported and platform quality all matter more over a holding period measured in years, which is the ground our comparison of the best trading apps in Canada covers.
How to actually do it
- Step 1: Open the destination account first, and make sure it is the same account type. A TFSA transfers into a TFSA, an RRSP into an RRSP.
- Step 2: Request the transfer at the new broker, not the old one. The receiving institution initiates it. This is the step that keeps the move tax-free.
- Step 3: Choose in-kind, cash or partial, and check first whether your holdings are supported at the destination.
- Step 4: Have a recent statement from the old account ready. You will need the account number, and the statement again if you are claiming a fee rebate.
- Step 5: Do not touch the money. No withdrawal, no cheque, no routing it through your chequing account. The moment the funds pass through your hands, it stops being a transfer.
Frequently asked questions
Does a direct transfer use up my contribution room? No. A direct transfer between TFSAs does not affect your contribution room, and amounts transferred directly to an RRSP generally do not affect your RRSP deduction limit.
Can I move my stocks without selling them? Yes, through an in-kind transfer, which moves your existing investments as they are without selling them. Confirm the receiving broker supports what you hold, and note the Questwealth exception above.
What if I already withdrew the money? For a TFSA, the recontribution counts as a new contribution against your current room, and any excess is taxed at 1% per month until it is removed. The room the withdrawal created returns the next calendar year. For an RRSP, an amount received in cash or by cheque is income for the year on line 12900 and cannot be moved back on a tax-deferred basis.
The bottom line
Every dollar of the penalty in the CRA’s example was avoidable, and avoiding it took no expertise at all. It took filing the request at the receiving institution instead of the sending one. Open the new account, ask the new broker to pull the assets over, decide whether they come across in-kind or in cash, and keep your hands off the money in between. The worst case is a transfer-out fee, and that is a fee your new broker may well refund.
Making the switch? Questrade charges $0 commissions on stocks and ETFs and rebates transfer fees up to $150 per account when you move in from another institution. Open a Questrade account
Disclaimer: The content on bestcanadianstocks.ca is for informational and entertainment purposes only and does not constitute financial advice. Past performance is not indicative of future results. Always consult a qualified financial advisor before making investment decisions. TFSA and RRSP transfer rules, withholding rates and the CRA worked example verified against Canada Revenue Agency pages, and the transfer fee rebate against the Questrade pricing page, as of September 5, 2026.
