Yes, the amount of your 401(k) contributions considered for the Retirement Savings Contributions Credit is reduced by the amount of your traditional IRA distribution. If your traditional IRA distribution was less than your 401(k) contribution by $2,000 or more, you'll still have the maximum $2,000 considered for the credit. If your traditional IRA distribution was more than your $9,000+ of 401(k) contributions for 2023, this will eliminate the entire amount considered for the credit.
This traditional IRA distribution in 2024 will also potentially affect this credit on your 2024, 2025 and 2026 tax returns.
