@squidomerer If I’m understanding this right it’s the opportunity cost of inflating your TFSA over time.
For sake of easy math let’s say my current TFSA of 160k averages 5% every year.
So;
2025: 168k + 7k contribution
2026: 183k + 7k
2027: 200k + 7k
Total room: 207k
3 years from now my TFSA would be 207k if I left the money in the TFSA. Hence contribution room would be 207k the following year if I pulled the entire 207k in 2027.
If I pull all my TFSA out this year, in 2027 my contribution room would be;
2025: 160k + 7k Contribution
2026: 167k + 7k
2027: 174k + 7k
Total room: 181k
So that’s a loss of 26k contribution room over 3 years.
I think this makes sense?