Approximating the knot of the Yud to the Bayis:[1]
One is to beware that the Yud of the knot[2] [of the Tefillin Shel Yad] does not move from the Bayis [of the Shel Yad].[3]  [It is thus to be constantly touching the Bayis of the Shel Yad. It is to touch the Bayis without any space in between.[4] It is to touch the actual Bayis and not just the Titura.[5] It is to touch the area of the Bayis that is facing the heart.[6] Many Poskim rule that this law applies even when one is not wearing the Tefillin.[7] Accordingly, those who are careful to have a plastic cube placed on the Tefillin Shel Yad for protection, must be careful to make a small hole in the cube to allow the Yud to touch the Bayis.[8]]

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[1] Admur 27/5; Siddur Admur “The Zohar states that the Yud is not to be moved from the Bayis.”; Michaber 27/2; See Piskeiy Teshuvos 27/6

[2] In Siddur Admur her states “Kesher Shel Yud” in Admur 27/5 and Michaber ibid he states “the Yud of the Kesher”

[3] The reason: This is due to the reason brought in the Zohar [Pinchas 3/236]. [Admur 27/5; M”B 27/10] The Zohar ibid was very stringent in this stating that one must be very careful that the Yud does not move from the Yad Tefillin in order so it does not create a separation, and one who does so is distanced from the pleasures of the next world. [Beis Yosef 27; Soles Belula 27/1; Kaf Hachaim 27/12]

[4] Ashel Avraham Butchach 27

Other opinions: Some Poskim rule it is valid if there is a very slight space in-between. [Teshuras Shaiy 2/93]

[5] See Q&A

[6] See Q&A

[7] See Q&A

[8] Igros Kodesh 12/433

[9] Avnei Nezer 14

[10] See Tzafnas Paneiach 3/160; Teshuras Shaiy 2/93; Shulchan Shlomo 27/3; Piskeiy Teshuvos 27 footnote 37

[11] Matzas Shmurim p. 64

[12] See Vayeishev Hayam 4/8 in name of Kisvei Arizal and Setimas Haposkim; Piskeiy Teshuvos ibid

[13] Implication of Zohar ibid; Mahariy Tzemach; Olas Tamid p. 57; Kesher Gudal 3/13; Shalmei Tzibur p. 40a; Siddur Beis Oved 29; Shaareiy Teshuvah 27/5; Chesed Lealafim 25/10; Ben Ish Chaiy Vayeira 15; M”B 27/10 “Some are careful”; Kaf Hachaim 27/12; Piskeiy Teshuvos  27/6

[14] Ashel Avraham Butchach 27

[15] See Igros Kodesh 12/433, printed in Shulchan Menachem 1/85, that the Rebbe Rayatz did not have a hole in the box that covered his Ketzitza of his Shel Yad, and that he did not wear the box during Davening; See also Yimei Melech 3/986 that the Rebbe Rayatz folded the straps over the Tefillin in a way that the Yud did not touch the Bayis and were behind the straps; See Siddur Raskin footnote 33

[16] Piskeiy Teshuvos 27/6

[17] Brought in Shaareiy Teshuvah 27/5; Kaf Hachaim 27/12; Rav SZ”A, brought in Piskeiy Tehsuvos ibid footnote 31, followed this custom

[18] Kaf Hachaim 27/12

[19] Shaareiy Teshuvah leaves this custom in question due to Chatzitza; M”B ibid negates the custom; Chazon Ish, brought in Piskeiy Tehsuvos ibid footnote 31, negates the custom as we find no source for allowing an additional sinew in the Rishonim or Achronim.

[20] See Piskeiy Teshuvos ibid footnotes 32-35

[21] See Zer Zahav of Mahriy Tzemach that so was custom of Rav Shmuel Vital; Kaf Hachaim 27/13 in name of Poskim that according to Kabala this binding is necessary, in addition to the need of approximating the Yud to the Bayis.