How Long Does It Really Take to Withdraw Money From a FHSA?

Noah is buying a condo in two weeks. As his closing appointment approaches, is there still time for him to open and contribute to a First Home Savings Account (FHSA)? In theory, there’s no minimum number of days that money must remain in a FHSA before it can be withdrawn, but in practice, things are a bit different!

Benefits of Last Minute Contributions to a FHSA

In general, it is in the interest of first-time buyers to open and contribute to a FHSA. Your contribution of up to $8,000 per year (or $16,000 if you have unused participation room) entitles you to a tax deduction AND you can withdraw it tax-free when you buy a qualifying home. So Noah could, in theory, open an account and contribute to it on Monday, then withdraw the funds on Tuesday to transfer them to his lawyer for his down payment, all the while enjoying a juicy tax return even if the money didn’t stay in his account very long!

In practice, however, there are a number of delays to consider. Opening the account, making contributions and withdrawals, then transferring the amount to a lawyer may all take a few working days.

3-5 Days to Withdraw from a FHSA

Noah already uses Wealthsimple and would like to continue doing so for his FHSA. This supplier says once they have received all the required information, including the RC725 form, they will process the withdrawal “within 3 to 5 business days.”

Would things move faster with other online brokers or banks? Probably not. Their websites do not give a lot of details about the process, but our research indicates that people who have been through the process have experienced delays of 3 to 10 working days.

Other Delays to Expect

If you don’t yet have a FHSA, like Noah, it can take up to two business days to open an account, and a similar amount of time to receive your first deposit into the account. However, these timeframes can be shortened when you deal with an institution where you already hold assets.

In addition, when you withdraw money from your registered accounts, it is usually deposited into your chequing account. Then, you have to send this money to the lawyer taking care of the closing, if you’re using it for your down payment, for example. All this also involves certain delays. Each step normally takes a maximum of three to five working days. It is often a little faster, but always calculate with the longest delay in mind to be sure to get the funds on time.

If it’s Monday and Noah has his closing appointment in two weeks to buy his condo, he’s taking a risk by opening a FHSA now. Taking into account two working days to open his account, another two working days to see the money appear in it, five working days to make a withdrawal and three working days to transfer the funds to the lawyer, he will exceed his closing date by two days. If he’s lucky and each step only takes a day or two, he’ll get it on time, but there’s no guarantee that it will work out this way.

If you’re in a situation similar to Noah’s, use caution and give yourself more time to benefit from the advantages of the FHSA!