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Savers Credit and Prior IRA Withdrawal

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    Savers Credit and Prior IRA Withdrawal

    In 2014 client took a $500 Traditional IRA withdrawal and a $2400 Roth Distribution. I know the $500 withdrawal results in an adjustment to a potential 2016 Savers Credit. The $2400 Roth was not taxable as it was less than his Roth contributions. He also turned 65 in 2014 and had the Roth for more than 5 years. It appears that the $2400 also adjusts his 2016 potential Savers Credit even though it was not taxable? Is this correct?

    #2
    Originally posted by Kram BergGold View Post
    In 2014 client took a $500 Traditional IRA withdrawal and a $2400 Roth Distribution. I know the $500 withdrawal results in an adjustment to a potential 2016 Savers Credit. The $2400 Roth was not taxable as it was less than his Roth contributions. He also turned 65 in 2014 and had the Roth for more than 5 years. It appears that the $2400 also adjusts his 2016 potential Savers Credit even though it was not taxable? Is this correct?
    Kram,
    It seems to be correct---see instruction for Form 8880

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      #3
      Agreed, the saver's credit has nothing to do with taxable income, only with qualified retirement accounts.

      Comment


        #4
        Thanks

        I appreciate the feedback. I have never had this before and it negatively affects my client so I wanted to be sure I did him no harm.

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