PRAISE THE PREZ

The worst day of my life was the day Uncle Sam summoned me to sign up for the draft. No way did I have the courage to join the Army, let alone fight in Vietnam. How ironic that one of the best days of my life was Saturday, when Congress repealed the ban on people like me (albeit, braver ones) serving.

Hats off to the President for making this a priority and shepherding it through in a way that achieved military buy-in and permanent, legislative repeal. It did not happen by chance.

Hats off to Nancy Pelosi, Barney Frank, Patrick Murphy, and Steny Hoyer in the House and to Harry Reid, Joe Lieberman, and Kirsten Gillibrand in the Senate – among many others – for making this happen.

There are still some steps in the process; but all indications are that LGBT Americans will be serving openly next year. If so, it will have been finished in less time than it took Harry Truman to start the process of integrating the military, which then took a further six years to complete (and for which he deserves tremendous credit).

THANK THE TROOPS

Eduardo Fernandez: “I hope you will post this, where you can pick out a thank you card and Xerox will print it and it will be sent to a service member who is currently serving in Iraq.”

☞ Happily.

CHEER THE NAVY

Did you see Tom Friedman’s column Saturday? The Navy is sailing ahead with energy innovation – for example, fighter jets running on bio fuel that doesn’t drive up the cost of food (as corn ethanol does) and “that can be grown in ways that will ultimately be cheaper than fossil fuels.”

Smart.

BOO THE POLITICIAN

Contrast that with the $220 million in sand berms Governor Bobby Jindal seems to have championed for all the wrong reasons. Did you see Rachel Maddow’s piece Friday?

Dumb.

Never mind that sand berms provide a lot of dredging work, and some of us have an interest in America’s leading dredging company. (Up 64% since it was suggested most recently three months ago, GLDD remains for me a long-term holding, though I’ve lightened up somewhat to buy other things mentioned here from time to time, like ALXA. That one is up 29% since Guru suggested it last month. Guru thinks it will get an approval that could put the stock at 5 in a year – but it’s only for money you can truly afford to lose, becase they might not get approval. Really.

BUY THE BOOK

Price war! Amazon has now matched Barnes & Noble’s $8.30 for my book (discounted from $14.95) – oh, and wait! They’ve now both lowered the price to $8.13! And still time to have it delivered by Christmas. Shouldn’t you give one to

CONVERT THE IRA

I should have suggested this sooner, mea culpa, mea culpa, mea maxima culpa, but there’s probably still time for you to convert your traditional IRA to a Roth IRA – it’s as simple as filling out a two-page form you can get from your IRA trustee – and it probably makes sense to do so, if you are an organized person who will pay attention, because the IRS gives you the benefit of hindsight. As explained here, you can “recharacterize” the conversion – annul it, basically – up until October 17, 2011.

So if you changed your mind once the enormity of your resultant tax bill sank in, no problem.

Or, if the value of your IRA fell sharply before October 17, you could recharacterize it . . . and then, instead of a 2010 conversion, perhaps make a conversion at a later date that would entail a lower tax payment on its reduced value.

You also get to decide whether to pay the tax due on the conversion all at once, as 2010 income, or – the default – to report half as 2011 income and half as 2012 income.

Why would you want to pay the tax before you have to? Because in return, all future appreciation and withdrawals (once you reach 59.5) are entirely federal-income-tax-free and subject to fewer regulations, withdrawal requirements, and paperwork – read my book.

Say you’re 40 with $100,000 in a traditional IRA that it costs you $30,000 in taxes to convert to a Roth IRA. And say you are able to grow that $100,000 at 10% a year for 30 years (not easy, but read my book). So now it’s $1,745,000, and you can withdraw as little or as much as you want tax-free.

Granted, by then the income tax might have been replaced with a consumption tax. So there wouldn’t have been tax to pay anyway. But something tells me we may have both.

Meanwhile, there’s something nice about knowing you have this account growing not just tax-deferred but tax-free.

At the end of the day, what the conversion really allows you to do is save more for your retirement. That extra $30,000 in the example above doesn’t go into your IRA; but it significantly increases its ultimate after-tax value to you, which amounts to the same thing.

Worth a look. And then, if you rush to do it, worth a re-look sometime prior to the October 17, 2011 deadline for recharacterizing, in case you change your mind.

 

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