In the 14 months since Congress gave federal workers the option of getting a lump-sum pension payment, the once-attractive benefit -- which for some would have meant a tax-free check worth $70,000 or more -- has been devalued because congressional rule changes have left most of the potential takers angry or confused.

Many would-be retirees who planned to take the big payment have found that after-the-fact changes by Congress have gutted the benefit to the point where it isn't worth it.

As originally passed, the lump-sum benefit (equal to all the money an individual paid into the civil service retirement fund while working) was to be returned to workers, tax-free, when they retired. Depending on an employe's salary and service time, that check would have been worth anywhere from a few thousand dollars to $100,000 or more.

In any case, Congress said (at the time) that workers should have the money because it was taxed previously, as part of their salary. The tax-free lump-sum option became law in June 1986 as part of the Federal Employees Retirement System Act.

But shortly after the pension option became law, revenue-hungry members of the Senate Finance Committee and the House Ways and Means Committee found a way to tax the benefit as part of the tax reform law. What the committees did was say that the lump-sum payments don't represent money paid into the pension fund; instead -- follow this closely -- the lump sum represents an amount "equal to" the money contributed. Literally overnight, that turned a tax-free benefit into a heavily taxed benefit.

Congress decided that the lump-sum payment should be considered as coming from two sources: employe contributions (which generally represent 10 percent or less of the total) and the remainder, which is determined to come from the government. It is that remainder, which could be 80 to 90 percent of the lump-sum payment, that Congress said should and would be taxed. So the tax-free feature of the lump-sum payment disappeared. Naturally it took the government -- in this case the Internal Revenue Service -- months to figure out what Congress had done, what it intended and how to collect while explaining this to fellow federal workers and retirees.

Federal workers and retirees view the lump-sum flip-flop as double taxation. But the important thing is how Congress, which makes the laws, views it. Congress says this is not double taxation because only the previously untaxed portion of your lump-sum payment or your pension -- that portion coming from the government -- is being taxed.

Many feds thought they should be able to put their lump-sum payments into individual retirement accounts to avoid paying taxes on it. Congress thought of that, too, and said no, they couldn't.

In addition, the IRS recently dropped a new bombshell on lump-sum takers: Workers who retire early, that is before age 55, and who take the lump sum will be hit with a penalty tax in addition to any regular tax.

For those confused about the lump-sum option, or the new taxable status of the federal pension, the official word is finally out. It is the brand-new version of IRS' updated Publication 721. Copies of that booklet are available at many local IRS offices, or by calling 1-800-424-FORM. Even for those several years away from retiring, the booklet -- which also tells about the taxability of a regular annuity -- will be helpful. And for workers planning to retire soon, or who have just retired, the book is a must before deciding whether the once-generous lump-sum option is still worth taking.