Lump Sums on Way Out
Tax-deferred lump-sum pension payments, available since January to feds forced to retire because of base closings, layoffs or abolished positions, are on the way out. The perk will be eliminated for most retirees under budget plans in the works.</br></br>The House-passed budget would eliminate the benefit as of Dec. 31. The Senate Governmental Affairs Committee plan would drop the benefit as of Sept. 30, 1995. Both would continue the benefit for terminally ill workers who take non-disability retirements.</br></br>For a brief period several years ago, lump-sum payments were available to almost all retirees, but they weren't a very good deal. In addition to reducing lifetime pension benefits (which are indexed to inflation), most of the lump-sum payments were subject to federal and state taxes. Even so, about 300,000 retirees took the payments - and got hit with the big tax bite - before Congress suspended them about two years ago except for the terminally ill.</br></br>Under legislation that took effect this year, more people could qualify. In addition to those with life-threatening illnesses, the benefit was extended to people who took discontinued service retirement because their jobs were abolished.</br></br>The legislation also permitted them to defer taxes on the taxable part of the lump-sum payment by rolling it over into an individual retirement account or another pension plan. That makes the payments a good deal, especially at a time when agency staffs are being reduced. But it apparently won't be around much longer.Departures