Hi! Question for my in-laws tax return... They appear to be eligible for the 2006 Credit for Qualified Retirement Savings Contributions. (i.e. they are under the $50K income limit for MFJ, and meet all other requirements.) However, they have received some pension income from former employers over the past few years (around $5K). If I am completing Form 8880 correctly, this receipt of pension income precludes them from taking the credit. Is this correct? Thanks in advance for helping me with this!!

If they have earned income, they can get the Retirement Savings Credit. The fact that they got pension income is irrelevant.