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1993 TAX LAW: FIVE WAYS TO AVOID 20 PERCENT LUMP-SUM WITHHOLDING

 WORCESTER, Mass., Dec. 23 /PRNewswire/ -- Retirees and employees who leave their jobs or are terminated could lose 20 cents of every dollar in their employer-sponsored retirement plans under a new tax law effective Jan. 1, 1993.
 Under the law, most lump-sum distributions from qualified employer plans must be transferred directly to another eligible qualified plan or the employer is required to withhold 20 percent of the funds for tax purposes.
 Allmerica Financial suggests five ways to avoid the 20 percent withholding:
 -- Roll the entire distribution directly into another employer's
 retirement plan, double checking that the plan will accept such
 rollovers. The funds must be transferred directly from trustee
 to trustee.
 -- Roll the distribution into an individual retirement account (IRA)
 or annuity, making certain the transaction is trustee to trustee.
 -- Defer the distribution, leaving it in the former employer's plan.
 -- If you need some cash, take a partial distribution and transfer
 the remaining money to an IRA or another employer plan. The
 partial distribution will be subject to 20 percent withholding
 but offers you access to some of your retirement assets without
 the full tax obligation on the entire amount of your
 distribution.
 -- Take the distribution in equal, periodic withdrawals over a
 minimum of 10 years.
 "The new withholding requirement is 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- 12/23/92
 /CONTACT: Richard Ryan of Allmerica Financial, 508-855-3467/


CO: Allmerica Financial ST: Massachusetts IN: INS SU:

CH -- NEFNS1 -- 9405 12/23/92 07:30 EST
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Date:Dec 23, 1992
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