On Tuesday June 15, 2010, the Globe & Mail published an article regarding the large number of over-contributions to Tax-Free Savings Accounts (TFSA’s). The article states that a large number of these over-contributions are mistakes based on a misunderstanding of the rules regarding contributions and withdrawals. For example, it may have been unclear to individuals that they could only contribute $5,000 in 2009, regardless of the any subsequent withdrawals that same year.
The article does a good job in explaining the remedies individuals can take to reduce or eliminate any penalties associated with an over-contribution. I suggest this article to anyone who has mistakenly over-contributed to their TFSA.