How a Spouse’s Death Affects Your TFSA Contribution Room

My condolences, Roberta. TFSA rules around inheritances and contribution room can be confusing, so here’s a clear explanation of the factors that determine how funds from a deceased spouse’s TFSA are treated and what you should consider before transferring or depositing any amounts into your own TFSA.

Available TFSA contribution room

Every Canadian aged 18 or older accumulates TFSA contribution room each year. Annual TFSA limits have changed since the account was introduced in 2009. As of January 1, 2025, an individual who was eligible for a TFSA in 2009 and has never contributed may have up to $102,000 of cumulative contribution room.

Year	Annual TFSA limit	Cumulative TFSA limit
2009	$5,000	$5,000
2010	$5,000	$10,000
2011	$5,000	$15,000
2012	$5,000	$20,000
2013	$5,500	$25,500
2014	$5,500	$31,000
2015	$10,000	$41,000
2016	$5,500	$46,500
2017	$5,500	$52,000
2018	$5,500	$57,500
2019	$6,000	$63,500
2020	$6,000	$69,500
2021	$6,000	$75,500
2022	$6,000	$81,500
2023	$6,500	$88,000
2024	$7,000	$95,000
2025	$7,000	$102,000

Two important additional points affect TFSA room: non-residents do not accumulate new TFSA room while living abroad, and contribution room is adjusted for prior contributions and withdrawals. Contributions reduce available room immediately; withdrawals restore equivalent room only in the following calendar year.

What happens when you inherit a TFSA?

When you inherit a TFSA, the treatment depends on your relationship to the deceased. If your spouse named you as beneficiary, or if you are a beneficiary of their estate, you generally have until December 31 of the year following the spouse’s death to transfer funds from their TFSA into your own TFSA without using your own contribution room. That deadline is critical: transfers made by that date can be treated as if they did not consume your personal TFSA room.

For non-spouse beneficiaries, however, there is no special rollover privilege. If you are not the spouse, any funds you inherit cannot be added to your TFSA without using your existing contribution room. In other words, non-spouse beneficiaries must treat an inherited TFSA like any other deposit: it counts against their available TFSA contribution room.

Successor holder

A spouse can be named a successor holder of a TFSA. If you were named successor holder, you have the option to take over the deceased spouse’s TFSA directly. That can be beneficial because any income or growth earned in the account after the spouse’s death generally remains tax-free. If you are only named as beneficiary (not successor holder), post-death growth may be taxable to you, although the account’s proceeds can still be transferred to your TFSA subject to the same December 31 deadline.

If you already have a TFSA, you may choose to consolidate accounts, but be mindful of contribution-room implications and deadlines before moving funds.

Confirming your TFSA room

To confirm your actual TFSA contribution room, contact the Canada Revenue Agency (CRA) or check your CRA My Account. Be aware that CRA records can lag: contributions and withdrawals from the prior year may not be reflected immediately in the new year, which can create confusion and sometimes lead to accidental overcontributions.

Because of this timing lag, verify your room carefully before depositing inherited funds into your TFSA, and keep documentation of any transfers or designations that support a transfer without using your personal contribution room.

What happens if you overcontribute to your TFSA?

Overcontributing to a TFSA carries a penalty of 1% per month on the excess amount, plus interest on unpaid penalties. This penalty accrues until the excess is removed or otherwise corrected, so it can become costly if not identified promptly. If you suspect you have overcontributed, act quickly to correct it and consult with the CRA or a tax professional.

What to do with a deceased spouse’s TFSA

In your situation, Roberta, you may be able to transfer the entire balance of your late husband’s TFSA into your TFSA without affecting your personal contribution room if you are the spouse beneficiary or the named successor holder. If you are successor holder, consider whether taking over the existing TFSA makes sense for preserving tax-free growth. If you are not the successor, be aware that any income or growth after death could be taxable, and any transfer into your TFSA must respect your available room and the December 31 deadline in the year after death.

Recommended next steps: verify your TFSA contribution room with the CRA, confirm whether you are the successor holder or designated beneficiary, document any designations or estate actions, and, if needed, consult a financial advisor or tax professional before moving funds. Acting deliberately will help avoid penalties and preserve tax advantages.

Read more about TFSAs:

• What types of tax-free savings accounts (TFSAs) exist?
• How does a TFSA work?
• When not to contribute to a TFSA
• TFSA vs. RRSP: How to decide between the two