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NEW TAX LAW COULD TAKE 20 PERCENT OF RETIREMENT SAVINGS

 WORCESTER, Mass., Jan. 21 /PRNewswire/ -- People who lose their jobs, change employers or retire could see their lump-sum distribution reduced by 20 cents on the dollar under a new law that impacts retirement benefits.
 The Unemployment Compensation Amendments Act of 1992 now requires employers to withhold 20 percent of the benefit for tax purposes, that is, if the lump sum is not transferred in the correct manner.
 Allmerica Financial of Worcester offers five possible methods under the new law for affected individuals to avoid the required withholding:
 -- Have the former employer roll the lump sum directly into another employer's retirement plan, double checking that the new plan will accept such rollovers. The funds must be transferred directly from trustee to trustee (employer to employer).
 -- Roll the distribution directly into an individual retirement account (IRA) or annuity, making certain the transaction is trustee to trustee (employer to IRA).
 -- Defer the distribution, leaving it in the former employer's plan. It will continue to build interest and give you more time to consider your options.
 -- Take a partial distribution and transfer the remaining money to an IRA or another employer's plan. Only the partial distribution is withheld at 20 percent which gives you some cash and tax-deferred retirement savings.
 -- Take the distribution in equal, periodic withdrawals over a minimum of 10 years.
 "The new withholding requiremei?s intended to encourage people to save for retirement, because the tax can be avoided by rolling the savings directly into another eligible retirement program," said Brian Tilley, assistant vice president, Allmerica Financial. "A big advantage of the law is it provides additional incentive for people to preserve the assets they accumulated for retirement rather than spending it upon distribution."
 -0- 1/21/93
 /CONTACT: Richard Ryan, corporate communications for Allmerica, 508-855-3467/


CO: Allmerica Financial ST: Massachusetts IN: SU:

SM -- NYFFNS1 -- 7184 01/21/93 07:01 EST
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Date:Jan 21, 1993
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