Question: I retired from the federal government last August, then returned to my old job on a contract in September. Now I'm not covered by the federal retirement system, but I do pay Social Security tax. Am I eligible to start an IRA for my contract earnings since September ?

Answer: You're not eligible for an IRA for any earnings during 1980, since you participated in an employer retirement plan during a part of that year.

However, you will qualify for an IRA for 1981 under these circumstances. Receipt of retirement pay from your previous employment is not considered "participation." And payment of Social Security is not a disqualifying retirement plan either.

You will be eligible to pay into your IRA as much as 15 percent of your 1981 earnings under the contract, up to a ceiling of $1,500.

There is a possible alternative. If the terms of your contract make it clear that there is an employer-employe relationship, then the preceding comments apply.

But if you're considered a self-employed contractor to the federal government, then you may be eligible for a keogh plan rathe than an IRA; and Keogh is available even if you worked under covered employment during the year.

You didn't make it clear in your letter, but the way you pay Social Security tax may be a good indicator. If the tax is withheld from your pay (and matched) by the federal government, that's pretty good evidence that you're considered an employe.

But if you pay the tax yourself, by filing Schedule SE with your tax return, that in itself implies self-employment.

The IRS has some guidelines for determining employe vs. self-employment status. You can get a free copy of IRS Publications 560 (on KEOGH) AND 590 (IRA) from any IRS office.

Unfortunately, it's now too late to start a Keogh for 1980 -- such a plan had to be initiated by Dec. 31, 1980. If you had a Keogh plan in existence on that date, however, you have until April 15 to make deposits on behalf of your 1980 earnings under contract.

Q: Our attorney suggested and we agreed that he should be the executor of our estate. Please comment on the wisdom of our decision .

A: Not a bad choice. If your estate is of any size and another individual is named as executor, he or she will probably have to retain an attorney for the legal work in any case.

However, you and your husband may want to consider naming each other as the co-executor in your respective wills. In that event, the survivor will have greater control over the disposition of assets.

The usual simple will directs that the assets -- or some percentage or dollar value -- go to a named individual (usually the spouse and/or children). But in most cases it doesn't spell out in the form in which those assets are to be delivered.

Take, for example, the case of a husband who dies and leaves everything to his surviving wife. If his estate includes, say, 100 shares of General Motors stock, the wife could receive the stock itself (distribution in kind).

But in the absence of any contrary instructions in the will, the executor could elect to sell the stock and deliver cash instead, if in his opinion it is more prudent to do so.

Most attorneys acting as executors would accede to the wishes of the heir, particularly if only one person stands to inherit the entire estate.

But the naming of the spouse as co-executor requires agreement before action and adds assurance that the attorney will consult with you or your husband (whoever survives) before disposing of any part of the estate.

Q: During the last fund-raising telethon on Channel 26 I pledged a substantial gift to the station. As is their custom, they sent me a WETA tote bag (which i didn't need and gave to my granddaughter). Do I still get the full deduction ?

A: No. Since you received something of value in return for your contribution, for tax pruposes you have to reduce the amount of the donation by the fair market value of the tote bag.

The fact that you gave the bag to your granddaughter doesn't change anything. However, you could have gotten the full deduction if you gave the premium to another qualifying charity that did not send you a gift in return or if, when you called in your pledge, you instructed the volunteer on the phone not to send you the tote bag in the first place.