@amit2020 wrote:
@Critter-3 wrote:
The saver's credit is moot since there are IRA distributions on the return ... so the form 8880 is not allowed thus making a roth contribution is a waste.
@Critter-3 Thank you, yes you are correct about "Savers Credit" ineligibility in the event of IRA distribution. I confirmed on IRS website and link it here for the benefit of current and future audience.
"Rollover contributions do not qualify for the credit. Also, your eligible contributions may be reduced by any recent distributions you received from a retirement plan or IRA, or from an ABLE account."
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-savings-contributions-save...
You are reading it incorrectly.
It is correct *rollovers* are not new contributions and do not count. You were asking (as I understood it) that you had $3,000 of earned income that you *could* use to make a NEW IRA contribution and a new contribution does qualify for the credit. IRA *distributions* can disqualify (as your quoit says) but a rollover/conversion does not count as a *distribution* and is specifically excluded.
From the 8880 instructions.
Enter the total amount of distributions you, and your spouse if filing jointly, received after 2017 and before the due date of your 2020 return (including extensions) from any of the following types of plans.
• Traditional or Roth IRAs (including myRAs), or ABLE accounts.
Don’t include any of the following.
• Distributions from your eligible retirement plan (other than a Roth IRA) rolled over or converted to your Roth IRA.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
