Yes, it can. The amount of any regular distribution that you receive that you do not roll over to another retirement account reduces dollar for dollar the amount of your contributions and your spouse's contributions considered when calculation the credit. For you or your spouse to obtain any of this credit, your new retirement contributions would have to exceed the amount distributed.
The law was written this way to prevent you from taking a retirement distribution just to make a new retirement contribution to obtain the credit, without actually increasing your retirement savings.
Yes, it can. The amount of any regular distribution that you receive that you do not roll over to another retirement account reduces dollar for dollar the amount of your contributions and your spouse's contributions considered when calculation the credit. For you or your spouse to obtain any of this credit, your new retirement contributions would have to exceed the amount distributed.
The law was written this way to prevent you from taking a retirement distribution just to make a new retirement contribution to obtain the credit, without actually increasing your retirement savings.