Q: After working 10 years for my former employer, I changed jobs. Recently, I received my pension-fund payment check for $5,700. (I made no contribution to the fund.) I don't become eligible for the pension plan at my present job until 1987. I have a five-year Individual Retirement Account that matures in 1990, paying 11.25 percent, to which I can make additions for the first two years of the term. Should I roll over the $5,700 into that account or open a new IRA to keep the employer plan money separate from my own? I really would like to invest this money in some sort of savings for a future down payment on a house; is this a viable option?

A: Let's start with what you shouldn't do: Don't deposit the $5,700 into your present IRA, where it will lose its identity. If you want to roll it over after reading the rest of the answer, put the funds in a new IRA so that when you become eligible for your present employer's pension plan, you can redeposit the money (plus additional accrued income) into that plan.

However, if -- as you say -- you really want to use that $5,700 as a down payment on a house, you do have a viable alternative. You can report the $5,700 as a lump-sum distribution on your 1985 tax return, using 10-year special averaging on Form 4972. The federal income tax on that entire amount should come to a little more than $300.

(You didn't have your address on your letter, so I don't know what kind of impact your state income tax will have; treatment varies from state to state. Talk to experts at the local state income tax office for guidance.)

With a relatively small income tax due on that $5,700, you could put the balance in some safe and fairly liquid investment until you're ready to buy a house. You need only be concerned about the tax due on the annual earnings on that money; you will owe no additional tax on the $5,700 itself.

You will, of course, lose the future retirement benefits attached to that $5,700, but in your circumstances and at your age (36), the house may be more important anyway.

Q: I recently read that the Internal Revenue Service is afraid "deadbeats" might decrease their tax withholding to foil the IRS's attempts to recover unpaid student loans by confiscating tax refunds. The article also said there could be a penalty for decreased withholding. I didn't think anyone was required to have more money withheld than is needed to cover one's income tax liability. Please explain.

A: You're right; no taxpayer is required to have more money withheld from pay than what is required to meet the anticipated tax liability at year's end. (In fact, you need only meet 80 percent of the expected total tax liability by a combination of withholding and estimated tax payments.)

But you are not authorized to make false statements on the Form W-4 (used by your employer to determine the amount of tax to be withheld). A penalty of $500 may be imposed for claiming extra W-4 allowances that decrease the amount of tax withheld, if there is no reasonable basis for either the number of allowances or other statements (such as incorrect marital status).

In addition, there may be a criminal penalty of not more than $1,000, or imprisonment for up to one year, or both, if convicted of willfully supplying false or fraudulent information on a Form W-4, or even for willfully failing to provide information that would increase the amount withheld.

So while a student-loan debtor legally can reduce withholding to lessen the possibility of having a refund that would be confiscated, he or she may not claim an untrue tax status or an unreasonable number of withholding allowances without running the risk of penalties.

Q: I retired last December, and received my final paycheck (for $142) in January. I have no other earned income for 1985, and that will be the only amount appearing on the 1985 W-2. Can my husband deposit money for me into a spousal IRA, or must I deposit, in my own separate account, no more than the $142 I was paid this year?

A: Sorry -- your IRA contribution for 1985 is limited to the $142 you earned. You are eligible for investment in a spousal IRA only when you have no earned income for the year.