IRA / Roth IRA and Long Term Capital Gain Questions
I'm trying to understand some details about the tax laws. Do I have this correct? Assume tax bracket is the same going in and going out. Assume the standard cases, not interested in the exceptions due to AGI limits etc. right now.. Standard IRA contributions are deductible and taxed deferred. Standard IRA contributions are taxed when distributed. Standard IRA earnings are taxed when distributed.
Roth IRA contributions are taxed (like all other income) Roth IRA contributions are not taxed when distributed (they were already taxed) Roth IRA earnings are not taxed.
The combination of the above means that numerically, the standard IRA and Roth IRA have the same net assuming the same tax brackets going in and out. Correct? OK now lets add a wrinkle, assume I am covered by a pension plan so I can still make contributions to a standard IRA but I cannot deduct contributions to a standard IRA. So now... Standard IRA contributions are NOT deductible (due to pension plan coverage). These standard IRA contributions are NOT taxed when distributed (they were already taxed). Standard IRA earnings are taxed when distributed. Correct? The standard IRA without deductions seems always worse compared to the Roth...correct? OK
Now, what if my standard IRA account is in a long term capital investment? Are the distributions from the standard IRA earnings taxed at the long term cap gain rate? What if the contributions are also taxed, does the distribution have to be split into earnings and contributions and each taxed at different rates. Seems like a nightmare. How is this handled form wise? It still seems worse compared to the Roth... correct?
thanks
Mark
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