September 1, 1997

Q. I'm 70 years old and still working. When I retire, I will not receive a monthly pension, but my contributions to the pension fund will be given to me as a lump sum subject to substantial tax. If I immediately put this money in an IRA, I understand the tax will be deferred. However, I also understand that withdrawals from an IRA must begin by age 70 1/2. Does this mean my lump-sum pension payment cannot be put into an IRA if I retire after age 70 1/2?

G.S., Hyde Park

A. Although people can't contribute to an IRA after age 70 1/2, the rules do allow the rollover of a lump sum such as you will have into an IRA, even if you have passed 70 1/2. But you'll want to be careful about the way the transfer is handled.

If the lump sum is given to you directly, your employer must withhold 20 percent of the amount. To avoid this, select the institution where you want the money to be held, and have the money transferred directly from your employer to the trustee.