A black spy or a white spy?
Posted on 12/07/2020 8:52:48 AM PST by SteveH
in a rollover ira, i purchase some spy in june 2020 and occasionally a bit more, a bit later. i have had rollover ira for a long time, not done anything with it other than watch it gradually grow over time, until now. i am retirement age (over 60yo).
it used to be the fidelity version of spy for many years.
i want to sell $210k of spy now (dec 2020).
spy went up 17.67% in about 5 months.
i have a long term cg rate of 15%, short term cg rate of 37%.
will i only get zinged at 37% for the 17.67%?
(in retrospect, changing from one version of spy to another will, if i sell now, cost me at least an additional 22% on the gains for the time, yikes, but i wanted the flexibility to bail out during normal trading hours)
Unless it is a Roth Ira everything you take out of it is taxed at your normal tax rate.
If you wait, the Biden Administration will relive you of all that worry............
Now might be a good time to sell your stocks that are certain losers.
The losses might offset part of your gains?
If it is inside an IRA, there is no capital gain. All taxes are deferred for qualified funds (IRAs, SEPs, 401(k)s, etc). You are taxed when distributed at your ordinary rate.
Gwjack
If you want capital, don’t you have to use capitals?
Rules on IRA’s. Roth Ira’s are funded with after tax funds and there is no tax on the appreciation. Regular Ira’s are funded with pre tax dollars. There is no tax when you sell inside this IRA but every dollar you take out is taxed as regular income. If you have it in a brokerage account and not an IRA as you stated, then long term, short term, cap gains come into play.
If this fund is in a tax-deferred IRA, short-term or long-term doesn’t matter with regards to taxes. Whatever you take out of a tax-deferred IRA is taxed at your normal income takes, not at a capital gains tax rate.
There’s a lot of details left unclear in your question, but based on what I think I understand, the answer is that there is no capital gains tax OR income tax due on assets in the account, UNTIL you actually take the distribution.
At that point, the assets distributed out of the account are taxed at your ordinary marginal tax rate, which - if not working - is probably pretty low.
As long as the assets are held in the IRA though, the distinction between short term and long term cap gains is meaningless.
*normal income rates
A black spy or a white spy?
lol
Pay attention to qwjack, Steve! The only thing I would add, to make it slightly clearer, is that when you take a distribution, it is taxed at your ordinary rate at that time. This can be very nice, if you are in a lower tax bracket after you retire.
If the asset is held inside of a traditional IRA, there are not current year taxes on gains inside the account.
Taxes only come into play, when you take distributions from the account, which [I believe] are taxable as ordinary income.
Black Spies Matter.
SteveH said "i want to sell $210k of spy now (dec 2020)."
That withdrawal alone will put him in the 24% bracket if he's married filing jointly, 35% if a single filer.
Proceeds - Cost = Capital Gain
Now, the rate you get taxed is depends on the length of time you held the asset. If you held for more than a year, it is a long term gain; less than a year, its short term—taxed at your income tax rate.
It is simple if you did it in two transactions; a buy and a sale. If you did multiple buys you need to apply the gains to each portion.
Quicken or any tax program will allow you to enter to transactions and it will spit out a Schedule D report and tell you the taxable amount.
But yeah...your general supposition is correct.
> Now might be a good time to sell your stocks that are certain losers.
over the last couple of years, i have cleared out the deadwood stocks and funds.
spy is my 3rd best performer of my four instruments.
It is unclear to me from his statement if he is taking a distribution or simply selling it and leaving the proceeds inside the IRA. Obviously there is NO tax due if it stays inside the IRA.
Ok, this is why most people make very bad investment advisors for their own money...
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