Yes. When you pay taxes on your pension (regular distribution or lump-sum distribution) the income taxes qualify to be offset. Now if someone is getting early distribution and having to pay a penalty on that distribution, that penalty - although technically taxed - comes after the tax credit. So, if they purchase a $30,000 solar panel system, they will pay whatever their income tax bracket is on that system and then pay an additional $3,000. So they would get $9,000 in tax credit then have to pay that $3,000 penalty.