
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: MONDAY, October 10, 1994                   TAG: 9410140018
SECTION: BUSINESS                    PAGE: 8   EDITION: METRO 
SOURCE: MAG POFF
DATELINE:                                 LENGTH: Medium

CONFUSION INDICATES NEED FOR HELP

Q: Thirty-five of us at General Electric are interested in this question. They offered us early retirement and have a buyout. The amount would be about $30,000 plus for different people at different times. Should we try to get it deferred to the first of the year or try five-year forward averaging of the retirement money? None of us understands these things.

A: Spokespersons at General Electric said the retirement offer has stood for several years but was slightly modified earlier this year during the national contract settlement. Employees have the option of retiring this year or deferring retirement into next year. The terms depend on salary range and the number of years of employment, so they differ with every person. The company also offers several options in its job package.

Any decision you make will have federal tax, state tax and Social Security ramifications. Only by putting a pencil to it can each person decide whether to defer taxes on the pension fund money further or to take advantage of five-year forward averaging. The latter taxes the money as if it were your only income divided among the next five years. People born earlier than 1936 also have the option of 10-year forward averaging.

The fact that you do not understand your options means you must seek professional help in making your various decisions. Even if you understood the various plans, you still have to work out your specific situation to know what is best for you. You should retain the services of a certified financial planner or a certified public accountant to help you with the calculations and the regulations.

James Pearman, a certified public accountant and a certified financial planner with Fee-Only Financial Planning in Roanoke, said any bonus money you receive will be taxed as ordinary income. It would be necessary to work individual calculations in order to decide the best way of handling your pension funds.

Pearman said there are no special financial planning rules that govern buyouts generally. Each individual decision varies with the person's circumstances.

by CNB