Q: I am having a difficult time getting answers from the IRS about how the new tax law affects employe contributions to Simplified Employe Pension (SEP) plans. Can an employer deduct a portion of an employe's wages and deposit it in an SEP plan to which the employer also makes regular contributions for the employe? If so, what is the maximum amount the employe can contribute each year? Does this maximum include the employer's contributions or only the employe's deposits? Are the employe's contributions -- but not those of the employer -- subject to Social Security tax, as I've read? I've seen reference to special provisions for "highly compensated employes." Who is a highly compensated employe? Can such individuals shelter additional amounts from taxes?

A: You're having difficulty getting answers from IRS people because this is a complex area with very few "experts" around -- and I don't consider myself a member of that select group.

But maybe I can provide a few answers that will shed a little light in the tunnel. An employer may withhold part of an employe's wages and deposit the money in an SEP and may make additional contributions on behalf of the employe. The 1987 ceiling on the employe's contributions is 15 percent of compensation, up to $7,000, exclusive of any employer contributions; the ceiling on the combined total of both employe and employer contributions is $30,000. (The dollar amounts will be indexed next year.)

All contributions are exempt from income tax liability until funds are withdrawn, at which time the money is taxed as ordinary income. The employe contributions are subject to Social Security tax, but not the employer contributions -- just as you read. The part about "highly compensated employes" relates to the proscription against discriminatory provisions. That is, the plan will not qualify for tax deferral if employer contributions discriminate in favor of officers, shareholders with more than 10 percent ownership or highly compensated employes. The SEP provisions relating to employer contributions must bear a uniform relationship to each employe's compensation up to $200,000. (Fifteen percent of $200,000 bumps up against the $30,000 top.)

Q: About five years ago I bought a home with my daughter, for which I took out a loan for the down payment. We sold the house last year and reported the sale on our tax returns -- her half as a principal residence, mine strictly as an investment. I have not yet paid off the loan. Do I treat the interest expense as investment interest? (I have investment income greater than the interest I pay.) If so, how would I report the interest paid out on my 1987 tax return? Or do I have to limit the interest deduction to 65 percent?

A: It depends on what you have done with the proceeds from the sale. Interest expense up to the time of the sale was investment interest -- but last year there was no differentiation anyway. If you used the proceeds to make a new investment of some kind (instead of paying off the loan), then it continues to be investment interest. But if you used the funds to pay off a car loan, or to take a trip to Europe or for some similar noninvestment purpose, then it became personal or consumer interest, and you may deduct only 65 percent of the total expense on your 1987 tax return.

Alexandra Armstrong, head of a well-known local financial planning company, wrote to call my attention to a problem in the Aug. 10 column. Writing about the new "kiddie tax," I suggested annuities as one vehicle for building tax-deferred funds for a child's college education. But I failed to point out that funds withdrawn from an annuity when the child reached college age would be subject to a 10 percent surtax. The penalty is imposed on withdrawals from an annuity before age 59 1/2; you should be aware of this extra tax if you're thinking of investing in an annuity for this purpose.

Abramson is a family financial counselor and tax adviser. Questions of general interest on tax matters, insurance, investments, estate planning and other aspects of family finances will be answered in this column. Advice cannot be given on an individual basis. Address all questions to E.M. Abramson, The Washington Post, Business News, 1150 15th Street NW, Washington, D.C. 20071.