Savers credit and Roth Conversion

Taxpayer is making a traditional IRA contribution for 2021 in order to reduce AGI and be eligible for the Savers Credit. Will a subsequent Roth Conversion invalidate the Savers Credit in any way? Do Roth Conversion prevent subsequent year’s Savers Credits?

Thank you



The Roth conversion in 2022 will have no effect on the deduction or Saver’s Credit for 2021 because it’s 2022 income.  It *will* add to 2022 AGI which could affect the amount of a 2022 Saver’s Credit depending on where AGI falls relative to the different AGI tiers for this credit.

Also note that while a distribution from the IRA during the testing period will normally trigger a reduction of eligible savers credit contributions for the testing period, an exception applies to distributions from any plan that are rolled into a Roth account. This is explained in the line 4 instructions on Form 8880.

Thanks for your replies

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