Reply To: Question About Saver's Credit

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#3147
Alan S.
Participant

Kaneohe, the 2000 distribution in 2016 would reduce the contributions made in 2016 and 2017, but a 4000 contribution in those years would just be reduced to 2000, so a max savers credit could still be generated for those two years. Of course once the reduction totals reach the contribution max for a year, then all credit potential is extinguished.

In other words, the taxpayer could not make an excess IRA contribution that exceeds the reduction by 2000 or any other amount in order to generate a credit. Any excess contribution is not treated as an eligible contribution if it is removed with earnings by the deadline.