Two Questions: Long-Term Capital Gains Tax and IRA-to-ROTH IRA Conversion

Two issues [-, long-term capital gains tax and 2. IRA to ROTH IRA issues] CLEC Investment and Financial Management Education Channel Blog date: December 30, 2019

The following is a question asked by a classmate:

I simplify it to two questions:

1. Long-term capital gains tax

2. IRA to ROTH IRA

My answer is as follows in the text of your letter:

Today (12/25/2019) I will shoot a video, which will include this part. After I upload the video, you can watch the video on our CLEC YouTube channel.

1. What would be the tax rate for converting from IRA to ROTH? Is the converted money considered as part of the income for that year and hence the total income tax bracket will be applied for taxing purpose?

James: All amounts transferred from a traditional IRA to a ROTH IRA are included in the current year's general income return. However, there is no tax deduction for capital gains in a traditional IRA account. I sent you another email on how to transfer from SCHWAB's traditional IRA to a ROTH IRA. If you are from another brokerage, you should first contact your brokerage to see how to transfer more conveniently. Usually, you can transfer online. And there is no need to sell the stocks first. You can transfer part of the stocks, all individual stocks, or only part of each stock. For example, you may have three investment targets, and each target can only transfer one-tenth or a different proportion.

2. I remembered, not very clearly though, that you mentioned once in the class that you sold your SPY and the tax rate was 15% or something like that. Was it because the SPY was in your non-retirement account and that the SPY was kept for well over one year such that it was taxed as long term capital gains?James: The following are the new long-term capital gains tax rates: If you have no other income, the long-term capital gains tax is based on the following table. But if you have other income, for example, if you are single, if you have income, if your general income tax is $20,000, your capital gains of $68,000 will be tax-free on the first $19,375 ($39,375 - $20,000), and in addition, $48,625 ($68,000 - $19,375) will be taxed at 15%.