By Cliff Peale
The Cincinnati Enquirer

Peter Kay spent four decades piling money into an Individual Retirement Account. Now 66, he's ready to give some of it away.

Thanks to a bill before Congress, Kay probably will soon have that chance. The bill would allow the Pierce Township resident, and millions others like him, to take money out of their IRA and donate it to a non-profit, tax free, after a certain age.

Kay is active in the capital campaign for Purdue University, and that and various local charities likely would benefit from his contributions.

"Anyone who's my age or less has invested substantial amounts in IRAs," said Kay, now working as a self-employed small business consultant. "If they pass this law, it'll really make that money work so much harder."

Kay is not alone. More than 40 million American households hold about $2.7 trillion in IRAs. Currently, they can't withdraw and contribute that money before death without paying income taxes.

If the IRA rollover provision passes, fund-raisers say it would open the doors to a whole new group of Americans, those who are not multimillionaires, but who have most of their assets in retirement vehicles like IRAs.

"It could open the floodgates to the baby boomers, who never thought they could be philanthropists," said Susan Ingmire, planned giving director at Cincinnati's Fine Arts Fund.

For donors, the ability to donate IRA assets tax-free means they could use vehicles such as charitable remainder trusts to gain annual income, with assets being gradually routed to local charities.

For those non-profits, it would provide a reliable source of funds, coming as a stagnant economy has put pressure on their long-term budgets.

The legislation is targeted at one-time contributions from those without the liquid assets to make regular large gifts, said Valerie Newell, managing director at investment advisory firm RiverPoint Capital Management.

"You have to make sure people have enough money saved for retirement," Newell said. " ... Still, it's wonderful to find new and different ways of giving their money and doing it in a tax-advantaged way."

The Fine Arts Fund has joined with the United Way, the Jewish Federation of Cincinnati and the Greater Cincinnati Foundation to capitalize on the changes. Once the law passes, they're planning a direct-mail campaign to tell potential donors.

That could happen soon. Both the Senate and House passed differing versions of the bill overwhelmingly this year, and President Bush is widely expected to sign whatever compromise emerges from conference committee.

That might not happen this year, but most believe some version of the IRA rollover provision will become law by early in 2004.

The House version would allow distributions beginning at age 70 1/2, while the Senate version would allow distributions to a charitable vehicle, such as a charitable gift annuity, at age 59 1/2.

The National Committee on Planned Giving held its national conference in Cincinnati this week.

Shari Fox, director of gift planning at the University of Cincinnati Foundation and president-elect of the national group, said retirement plans "are quickly becoming the largest asset in anyone's portfolio."

"There's a lot of uncertainty in people's minds right now," Fox said. "When people are making significant gifts, they're looking at their own economic picture."

E-mail cpeale@enquirer.com.