tIRA and rIRA Questions

[Kstatus]

Hello,

I've read about the roth conversion pipeline and am curious about this because I fall the strange in between for tax brackets.

Current setup:
Gross income 75k
Maxing 401k = 18000
Maxing HSA = 3400
Std Deduction = 6350

AGI = 47,250

Now the question is whether I do a traditional or roth IRA.

My assumption is that I should do a tIRA because if I contribute to a ROTH IRA it would be using money that is taxed at 25%.  I am assuming that in retirement I would want to be converting my IRA money at around these rates:

Year 1 - 35k converted, Live off of taxed account long term capital gains 35k
Year 2 - 36,050 converted, Live off of taxed account long term cap gains 36,050
Year 3 - continue the trend (3% inflation)

Is the money used from the long term capital gains counted towards AGI?  Would this mean that year 1 of retirement my AGI would be 70k?  Would this mean that the conversion would be taxed at the 25% bracket again. 

At this point it seems like a wash and I would rather use the ROTH so I have more flexibility later on because it seems like the ROTH is where everyone wants their money in the end anyways.

Please put aside any assumptions on where the tax rates will be.  I am currently trying to construct this with the known tax rates.

Thanks,
K

[dandarc]

Your conversion is ordinary income.  Your Long Term Capital Gains are counted after ordinary income.  LTCG are included in AGI, but they aren't the "first dollars", they're the "last dollars" in that figure.

See the worksheet on page 44 of the 1040 instructions here - this is how you figure tax owed when you have qualified dividends and/or long-term capital gains.
https://www.irs.gov/pub/irs-pdf/i1040gi.pdf

Summary - take your taxable income, which has the LTCG in them.  Subtract the LTCG.  Figure the tax on the remainder as ordinary income.  Figure the tax on the LTCG.  Add these two together, and that's your tax owed.

[terran]

Also, will your capital gains be $35k or will you sell $35k worth of stock (some of which will be cost basis, some of which will be capital gains)?

[Kstatus]

I'm using 35k as the total value sold to live off of 35k that year.