Savers Credit and Prior IRA Withdrawal

[Kram BergGold]

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?

[Gene V]

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

https://www.irs.gov/pub/irs-pdf/f8880.pdf

[Gretel]

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

[Kram BergGold]

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.