The purpose of the credit is to promote saving for retirement. Reducing the amount of new contributions that are considered when calculation the credit by the amount of recent distributions is an anti-abuse provision to prevent people from claiming the credit by funding new contributions with distributions and not actually increasing retirement savings. Congress apparently figured that distributions within the two year prior the year for which this credit is being claimed are close enough in time to be considered to be assisting in funding the new contribution and made this restriction part of the tax code: https://www.law.cornell.edu/uscode/text/26/25B#d_2
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