Q: I recently accepted a new position and will receive my vested money from my previous employer's pension program, amounting to about $60,000 paid into the fund by my employer, plus $10,000 that I contributed (and paid tax on). I'm 47 years old, and my goal is to have this money available for retirement at about age 65. Should I roll the money over into an IRA and defer taxes on the $60,000? Or should I pay the tax on the distribution in 1985 and look into tax-exempt investments such as zero-coupon bonds? If I pay the tax this year, would it be better to diversify the investments by using a mutual fund family?

A: It appears from the wording of your question that you understand that there will be no tax liability on the $10,000 you had contributed to the plan, and that you may not roll that amount over into an IRA. If you were to accept the $60,000 as a lump-sum distribution, the federal tax on that amount, using special 10-year averaging, would amount to a little over $7,700; and there would be some state income tax due as well.

You could then look at a zero-coupon municipal bond for the $10,000 you can't roll over -- pick one that's due to mature in about 15 years or so, just to give you a little leeway in case you decide to retire a little earlier than you now plan.

This package would give you a good spread and should provide a substantial portfolio by retirement. At that time, you probably will want to move in the direction of greater security and primarily income rather than growth.

Q: In early 1984, I deposited a total of $2,250 into two separate IRA accounts -- my own and a spousal account. Later in the year my wife started to work; she earned about $100 before she was injured and had to stop working. I know she was then limited to $100 for her IRA, but I inadvertently deducted the whole $2,250 on my 1984 return. I understand there is a 6 percent penalty as long as the excess remains in the account. What must I do to correct the situation?

A: You're right -- there is normally a 6 percent penalty for each year the excess remains in the IRA. But there may be a solution that permits you to avoid the penalty by doing a little paperwork.

The first step is to file an amended 1984 return, using IRS Form 1040-X, on which you reduce the amount you claim for IRA contributions from $2,250 to $2,100. Your wife is entitled to an IRA payment equal to the $100 she earned herself, and it may stay in the same account. Send the IRS a check for the additional tax along with the 1040-X. (You can anticipate getting a bill from the IRS for interest.) You may have to file an amended state return also.

For 1985, assuming she doesn't go back to work at any time this year, she qualifies for a spousal deposit based on your earnings. So write to the custodians of her account and tell them that the excess $125 that was deposited for 1984 should be shifted on their books to a 1985 spousal IRA payment.

Then for 1985 deposit only a total of $2,100 in the two accounts -- but claim $2,250 as an IRA adjustment on your 1985 tax return, covering the $2,100 in cash, plus the $150 left over from 1984. Thus, for the two years you will have deposited a total of $4,350 and claimed a total of $4,350 -- and avoided the 6 percent penalty on the excess payment.