The Economic Recovery Tax Act of 1981 opened the door to individual retirement accounts (IRAs) for everyone. Since Jan. 1, 1982 -- the effective date of the new rules -- millions of Americans passed through that door to deposit billions of dollars in a large variety of investments.

While the Tax Reform Act of 1986 didn't slam the door, it did make the opening smaller. On Jan. 1, new restrictions removed much of the bloom from the IRA rose by adding a "means" test for some and making it more difficult to qualify for the full tax break that had been available for the previous four years.

How will the new rules affect you? There are now two criteria that determine your eligibility for a tax-deductible IRA in 1987 and following years: participation in a retirement plan and your adjusted gross income (AGI) for the year.

Eligibility for IRA Deposits If you are not covered at work by a qualified pension, profit-sharing plan or a tax-sheltered annuity, then there is no change in eligibility regardless of your income level. You may deposit up to $2,000 a year (but not more than your earned income) in an IRA of your choosing, and deduct the amount of your deposit from your taxable income. A married couple doesn't qualify under this rule if either spouse is covered by an employer plan.

If you're employed and your spouse has less than $250 earned income for the year, the ceiling goes up to $2,250 if you open a spousal account in addition to your own. You may divide the $2,250 any way you wish, but not more than $2,000 may go into either account.

If you are self-employed, a Keogh is considered a qualified retirement plan; if you make any deposits to the Keogh plan for the tax year, you are considered a participant and may not also make a tax-deductible contribution to an IRA.

Other types of employer plans that have the same effect include 401(a), 401(k), 403(a), 403(b) and Simplified Employer Pension plans (SEPs). If you fall into the group that is disqualified under the first rule by reason of participation in some kind of employer plan, then your eligibility to make a tax-deductible contribution to an IRA depends on your AGI for the current tax year.

If you are single and covered by an employer plan, you may still deposit money in an IRA and claim a corresponding deduction from income if your AGI is $25,000 or less. If your AGI exceeds that figure, the allowable tax deduction for an IRA is gradually phased out (at the rate of $200 per $1,000 of AGI) until it disappears entirely at an AGI level of $35,000. For a married couple, the comparable numbers are $40,000 for start of the phase-out, and an AGI of $50,000 for total elimination of the IRA deduction. (If you're married but file separate tax returns, there is no free ride; the deduction phase-out starts at zero and ends at $10,000 AGI.)

But all is not lost. To the extent that you are not eligible for a tax deduction for your contributions, you may still put dollars into an IRA, regardless of coverage by an employer plan or the amount of your income. However, you may not take a deduction on your tax return for the contribution, so you are depositing after-tax dollars.

The good news: Federal income tax will be deferred on all earnings that accumulate in the IRA, regardless of the tax status of the original deposit, until you start to withdraw from the account.

Despite that tax break, you should consider alternatives; a nondeductible IRA may not be the best way to go. A single-payment annuity may offer a higher yield with similar tax deferral on accumulating earnings. A municipal bond, bond fund or unit trust may provide a comparable yield with permanent exemption from income tax rather than just deferral.

Qualified tax-deductible contributions to an IRA are accounted for on your tax return just as in the past. You simply enter the allowable amount on your Form 1040 or 1040A, based on your worksheet calculations in the instruction booklet. However, if you make any IRA deposits that are not deductible, you will have to use new IRS Form 8606 to account for the tax status of your contributions.

Different Accounts You may have as many different IRAs as you wish, subject only to any minimum deposits the account trustee may establish. If you want to move your funds from one account to another, you have two options:

For a trustee-to-trustee transfer, you need only request the old trustee to transfer all (or a specified amount) of your funds to the new trustee -- after arranging for acceptance. It may be easier to work through the new trustee; if you sign the appropriate forms, the receiving organization usually can arrange the transfer. As long as you don't handle the money yourself, you may make intertrustee transfers as often as you wish. Since you're working with a tax-deferred account, there are no income tax consequences.

Your other option is to roll the funds from one account over to another by having the trustee of the current account send you a check for a part or all of the balance in your IRA. You then may deposit the funds into a new IRA yourself; as long as the rollover is accomplished within 60 days of receipt of the money from the old account, there is no tax liability. (However, notify the new trustee thatyour deposit is a rollover, to avoid having it reported as an excess deposit.)

Retirement Plan Rollovers If you receive a lump-sum distribution from an employer retirement plan (including Keogh), you may roll over all or part of the distribution into an IRA. This option makes it possible to continue to defer tax on the payout until the funds are withdrawn, usually at retirement. Like the IRA-to-IRA rollover, you must reinvest the funds from the distribution within 60 days after receipt.

(Any part of the distribution representing voluntary nondeductible payments you made to your employer's plan may not be rolled over into an IRA. However, since this is a return of previously taxed dollars, the money is yours without tax liability anyway.)

Even if you are eligible to roll over funds received in a distribution, you should consider all the tax consequences before doing so. A rollover will permit you to defer tax, but when the money is later withdrawn from the IRA it will be taxed as ordinary income. Qualified distributions from an employer plan, however, may be eligible for special tax treatment. You may be permitted to calculate tax liability on such a distribution as if it had been received over a five year period. Although all the resulting tax due is paid in the year of receipt, figuring the tax as if it were received in five separate chunks may result in enough of a tax saving to warrant paying the tax now rather than rolling over into an IRA.

If you were at least 50 years old on Jan. 1, 1986, you may choose between this five-year averaging and the old 10-year averaging available before the Tax Reform Act of 1986. However, if you use the 10-year method, you must also use 1986 tax rates; with the five-year method, you use the rates current for the year of receipt. Should you decide to go this route, figure the tax both ways to see which gives you the better break.

Distributions Except in the case of death or disability, funds withdrawn from an IRA before age 59 1/2 are subject to a 10 percent penalty. After you are 59 1/2 and before you are 70 1/2, you may withdraw any amount you wish from any IRA, subject only to including previously untaxed amounts as ordinary income in the year withdrawn.

You may not elect to withdraw only previously taxed dollars in order to reduce your current tax bill. Instead, you must establish the ratio between the two types of deposits (taxable and tax-deductible), which is then used to determine what part of your total withdrawals for the year is subject to tax. (Form 8606, mentioned above, is also used to establish the tax status of mixed withdrawals.)

You must begin withdrawals from an IRA in the year in which you reach age 70 1/2. You may withdraw all or part of the funds, but withdrawal of at least a minimal amount, based on your life expectancy, is mandatory at that time.

The first mandatory withdrawal must be made not later than April 1 of the calendar year following the year in which you reach that 70 1/2 milestone. Successive annual withdrawals are required by Dec. 31 of each year; if you wait until April 1 to make the first withdrawal, both that one and the second withdrawal will fall into one tax year.

For example: If you were born, Oct. 15, 1917, you will reach 70 1/2 on April 15, 1988. That sets the first mandatory withdrawal date as April 1, 1989. But your next withdrawal must be made by Dec. 31, 1989, giving you two tax events in 1989. Depending on the total amount in all your IRAs and the amount of your taxable income, you might find it advantageous to make that first withdrawal by Dec. 31, 1988, thus limiting your tax liability to one withdrawal in each tax year.

Allocating Withdrawals If you are older than 70 1/2, are faced with mandatory withdrawals and have more than one IRA, for 1987 you may take the money from any account you wish (although you do have to calculate the tax ratio if you made a nondeductible contribution this year).

However, this flexibility may be gone next year. The IRS has issued a proposed rule requiring that each IRA be considered separately when determining the minimum mandatory withdrawal after 70 1/2. At this date, a final determination has not yet been made; you will be informed of the outcome through these pages.

The 401(k) Escape Hatch The new restrictions on IRAs -- though not as onerous as many feared at first -- have generated more interest in a type of tax-deferred employer-sponsored retirement plan called a "CODA" ("cash or deferred arrangement") or a "401(k)" (named for the section of the Internal Revenue Code authorizing these plans).

If your employer has a 401(k) plan, you may put away up to 15 percent of your pay, to an annual ceiling of $7,000. The amount you agree to contribute is withheld from your pay by your employer, and is not reported as taxable income on your Form W-2 at the end of the year (although Social Security tax is withheld if you haven't yet reached the cutoff amount).

All is not golden here either: The Tax Reform Act of 1986 has imposed restrictions on withdrawals from a 401(k) that make it more closely comparable to an IRA than it had been. Early withdrawals (before age 59 1/2) may be made only in the event of personal hardship -- and you may withdraw only up to the total amount of your own contributions.

In addition to paying ordinary income tax on withdrawals, early withdrawals will be subject to a 10 percent tax penalty. (The penalty is waived only if you use the money to pay medical expenses that exceed 7.5 percent of your adjusted gross income for the year of the withdrawal.)

Because the 401(k) is an employer-sponsored plan, the choice of where to put your dollars is limited to the investment vehicles made available by the employer. But most plans offer several options that may include a choice of several mutual funds (often any fund in a fund "family," with transfer privileges), an insurance annuity or even shares of stock in the employer company.

One of the nicer things about many 401(k) plans is that the employer will often match your contribution with company dollars. This is usually done on a percentage basis; for example, the company may deposit 50 cents for each dollar you contribute, up to 5 percent of your salary.

Such a program gives you an immediate and substantial return on your initial investment. Any amount contributed by the employer is not subject to the $7,000 annual ceiling; however, there is a $30,000 limit each year on the amount paid into any combination of retirement plans. (There are some complex rules; anyone approaching this ceiling should seek advice from a tax consultant or retirement counselor. A specialist may be available in the personnel office where you work.)

The Bottom Line If you (and your spouse, if married) are not covered by a pension plan where you work, the rules governing your eligibility for a fully tax deductible IRA contribution haven't changed. Participation in an employer plan of some kind introduces a means test, with eligibility phasing out between $25,000 and $35,000 for a single person and between $40,000 and $50,000 for a couple.

Disqualification based on the adjusted gross income test still leaves you with the right to contribute to an IRA -- but not to deduct the amount of the contribution from income on your tax return. However, even in this case earnings on after-tax contributions accumulate without current tax liability.

If your employer offers a 401(k) pension plan, take a good, hard look at it -- it may be preferable to an IRA even if you are eligible for one. Tax-deductible contributions are subject to a higher ceiling than deposits to an IRA; like an IRA, earnings compound in the plan tax-free until withdrawn; and your employer may sweeten the pot by matching, at least in part, the amount you are having withheld from your pay.

The bottom line: As is generally true in most areas of life, when you're looking at the choices available for retirement planning, consider all the options carefully before deciding which way to jum