As a matter of public policy, Uncle Sam's ubiquitous tax collectors offer a helping hand to people who are looking ahead to retirement and are trying to accumulate a nest egg to supplement any Social Security and company pension credits they are acquiring.

If you're working for wages and your employer does not have a company retirement plan, you can build your own with an Individual Retirement Acccount (IRA). An eligible worker can deposit 15 percent of total wages up to a maximum of $1,500 a year.

(you also can qualify for an IRA if you are not eligible under your employer's plan or if it is a voluntary program and you elect not to be covered.)

For a worker with a spouse who is not employed for pay outside the home, the ceiling is raised to $1,750 a year. A seperate IRA is required for each spouse, with the same amount going into each account.

A self-employed person is eligible for a Koegh plan. Deposits into Keogh are similarly limited to 15 percent of net earnings from self-employment, but the annual ceiling is $7,500 -- considerably higher than the IRA maximum.

In either case, the amount invested each year is subtracted directly from income, reducing taxable income dollar for dollar. In addition, earnings on the accumulating total in either accountare not subject to income tax. So your capital can grow at a faster rate, undiluated by any tax liability.

Since both deposits and earnings are exempt from tax initially, all withdrawals from the accounts immediately are taxable in full as ordinary income. But presumably this will occurafter retirement, when you are in a lower tax bracket.

Are you out in the cold if you're notself-employed and you're covered by a retirement plan, however inadequate, where you work?

No. You still can get a helping hand from the IRS by using a tax-sheltered annuity plan -- a less well-known but readily available insurance program that provides similar tax relief for the individual trying to build a capital base for retirement.

There are really two different categories of tax-sheltered annuities. The first applies only to employes of selected kinds of organizations: public education systems, under Public Law 87-370; and nonprofit organizations, under IRS Code Section 501 (c)(3).

Money to be contributed to a tax-sheltered annuity (TSA) by employes of a qualifying organization is withheldby the employer, then paid directly to the insurance carrier selected (usually from a list of approved plans provided by the employer).

The maximum annual contribution is calculated separately for each employe from a rather complicated formula which takes into account such things as salary and length of service.

The amount withheld from pay to be contributed to the plan doesn't appear on the employe's w-2 form at the end of the year, and no income tax is withheld from that amount.

One important qualification: The employer must agree to offer the TSA, without reservation, to all employes. And of course the employer. And of course the employer must be willing to handle the extra bookkeeping chores involved in withholding the fundsand sending properly identified contributions to the several annuity sponsors selected by employes.

The second major category is the deferred annuity available to anyone who wishes to start one. It doesn't matterwhether you're self-employed, covered by a retirement plan at work, oralready participating in an IRA or Keogh.

This kind of annuity is often referred to as an "individual" annuity to distinguish it from the "group" nature of the first type. It also is known as a "nonqualified" annuity, as opposed to TSA, Keogh and IRA plans -- all of which qualify for special treatment under some provision of the IRS regulations.

A major difference between the individual annuity and the other three programs: You invest after-tax dollars. That is, you get no tax deduction for the money you invest in an individual annuity.

But tax liability on earnings in the plan is deferred until you with draw the money, so that earnings can accumulate faster than, say, interest in a blank CD, which is currently taxable.

Becaue you already have paid income tax on the money you invest in an individual annuity, you may withdraw thefunds at any time without any tax consequences. (But you do report as income, and pay tax on, withdrawn earnings which have been accumulating tax-free.)

An annuity has to be looked at as twodifferent programs. During the first-or accumulation-phase, funds are invested and growing through compounding tax-free earnings.

The total amount achieved during the accumulationg phase forms the capital base for the second-or payout-phase, the period when you are receiving payments.

When you purchase annuity you can choose between a "single payment" or an "installment payment" plan. As the name implies, a single payment annuity is purchased by lump sumpayment of at least the minimum amount required by the sponsoring company. (This may be as little as $1,000 or as much as $5,000.)

The installment payment plan is a flexible program that permits you to invest as little as $25 at a time, either on a regular monthly basis or in varying amounts at irregular and unspecified periods.

There is yet another decision to be made. You can choose to invest in either a "fixed" annuity or a "variable"annuity account-or split between the two in some designated proportion.

The fixed annuity is essentially a savings account, with interest earned at a rate that usually varies periodically in line with interest rates in general.

Some minimum rate is guaranteed in the contract-usually something between 3 1/2 and 6 percent. The plan sponsorswill pay more if conditions warrant; some plans being sold now guarantee as much as 10 percent for the first year of the contract.

The variable annuity contract resembles a mutual fund investment (except for the tax deferral feature). The sponsor invests annuity payments in a portfolio of common stocks, and in some cases in bonds and other types of conservative investments.

Rather than manage their own investment portfolios, some plan sponsors offer the purchase a choice of several mutual funds. (This option still retains the benefit of tax deferral because the sponsor, not the investor, owns the fund account investor, owns the fund account; the investor owns only a contract with the sponsoring company.)

The variable annuity offers an opportunity for growth if the portfolio is well-managed and appreciates in value during the accumulation phase. This opportunity is not present in a fixed annuity, but -- like any other investment -- growth potential carries some inherent risk of loss.

In addition, although there is not tax liability to the individual contract owner, the sponsoring company may be liable for corporate income tax on net capital gains realized from portfolio transations. (There is no corresponding tax credit to the owner). when he later withdraws the funds.)

With any of the various types of individual annuities mentioned -- single payment or flexible premium, fixed or variable -- you can withdraw any or all of the funds at any time.

As mentioned earlier, there is no tax liability when you withdraw principal; after total withdrawals equal total investments, subsequent amounts withdrawn are taxable as ordinary income.

Assuming you leave the funds with the company until you are ready to retire, what are your options then?

Your first option is to do nothing. You may, if you wish, leave all the funds in the account to continue earning tax-deferred income.

Or you may withdraw the entire balance in the account, reporting as income in that year the total of accumulated -- and previously untaxed -- earnings. You may then, of course, use the funds as you wish, without restriction.

Or you may convert the annuity contract, without tax consequences, to any guaranteed payment annuity plan offered by the sponsoring company. (If you wish, you can transfer the funds to another company which offers a payout you like better.)

This can be one of several kinds that are generally available, including an annuity that guarantees regular payments to you as long as you live, either with or without some guaranteed minimum number of payments if you should die at a young age.

A popular choice is a "joint and survivor" annuity, which pays an income to you and to another named individual (usually but not necessarily a spouse) as long as either one of you survives.

If you elect a payout annuity of any kind, a portion of each payment will represent a nontaxable return of invested principal; the balance will be taxable as ordinary income in the year received. The ratio is fixed at the time of the first payment an is calculated from IRS mortality tables.

Now that you have at least a basic understanding of what an annuity is, the obvious question follows: Is an individual annuity a good investment?

The equally obvious answer: It depends on your personal circumstances.

Deferral of tax liability on earnings during the accumulation phase can be attractive, depending on both your present tax bracket and your anticipated tax rate after retirement.

The ability to withdraw all or part of the principal at any time without tax consequences is a plus.

What amounts to a flexible interest rate on the fixed annuity during accumulation can be good or bad, depending on what happens to interest rates in general.

For an investor with a number of years to go until retirement, the flexible-payment program offers an opportunity to accumulate a substantial nestegg with a series of small periodic investments.

If you're considering a deferred annuity -- either single or installment payments -- the key factors to look for are the sales charge and the yield (both guaranteed and projected).

At retirement time the factors change. Now you need to look at the monthly payment for your age and sex per $1,000 of accumulated capital.

At the end of the accumulation period, you should compare the return on an annuity from the sponsoring company with programs from other companies and with the yields then available from alternative investments.

If there is a history of early deaths in your family, or if you have a serious health problem, then you probably should find another place for your money.

On the other hand, if you anticipate a better-than-average life expectancy, or if you really feel more comfortable with a guaranteed income you can't outlive, then a retire annuity may be the way to go.