As Congress mulls legislation that would expand tax breaks for individual retirement accounts, some banks are kicking marketing campaigns into high gear.

Keycorp, First Union Corp., and Wells Fargo & Co. are among those that have renewed efforts to pitch IRAs. In doing so, they hope to grab back some savings dollars that have been lost to mutual fund companies and brokerage firms.

All three companies are offering the latest rage in IRA products - consolidated accounts. These accounts let customers "mix and match" IRAs from an array of deposits, mutual funds, and other investments. They also offer combined monthly statements, making it easier for customers to track retirement savings.

Right now only a handful of banks have consolidated IRAs. But experts say the expected easing of the tax rules - coupled with banks' desire to snare rollover business from people who switch or leave jobs - is spurring product innovation.

"Now is the right time for this, with the legislation in Congress and the emphasis that Americans have on savings," said Chester F. Galezio, a senior vice president at First Union, a $77 billion-asset banking company in Charlotte, N.C.

Since their creation in 1981, IRAs have pulled in $950 billion in retirement savings, according to Access Research Inc., Windsor, Conn. The big advantage of the investments is that earnings accumulate tax-free on the $2,000 that taxpayers may contribute each year.

But fresh contributions to IRAs have slowed dramatically since 1986, when Congress changed a key IRA rule. Initially, taxpayers were allowed to deduct from income IRA contributions of up to $2,000 a year. But when Congress overhauled the tax code, this up-front tax break was eliminated for individuals earning more than $25,000 a year and joint-filers earning more than $35,000.

Since then, most of the competition for IRAs has centered on the rollover business - capturing the savings people get from lump-sum pension payouts, 401(k) plans, and other retirement savings.

Industry observers believe IRAs will get substantial new inflows if, as seems increasingly likely, Congress reinstates some of the tax advantages.

"If Congress were to do the minimum and restore some of the provisions of the original IRA, just a straight line projection would be $25 to $26 billion in IRAs, not counting for inflation," said Herb Spira, tax counsel for the Independent Bankers Association of America. "And that would be an extremely conservative estimate."

Banks, however, are playing something of a catch-up game. They admit they have fallen behind the biggest mutual fund companies and brokerage firms in developing customer-friendly IRA products. Indeed, just $200 billion of IRA funds are in bank and thrift deposits, according to the Investment Company Institute.

"Banks just haven't positioned this product well. They need to convince customers that this is smart savings," said Gary Gregg, assistant vice president and product manager for Cleveland-based Keycorp.

Keycorp recently began marketing its IRA Director account throughout its 25-state network. Until now, the product has been offered only through former Society Corp. branches; the two companies merged in March 1994.

Throughout the summer, Keycorp expects to flood its eastern customers with mailings and branch displays promoting IRAs, Mr. Gregg said. For now, the effort is aimed at bringing in more rollover money, which has outstripped yearly contribution money six-to-one, but Keycorp is also poised to grab business if Congress goes through with IRA reform.

Keycorp charges a $25 annual fee for self-directed IRAs - those that include nondeposit products. That's in line with First Union's charge, and lower than Wells Fargo's $35 fee.

All three companies make their proprietary mutual funds as well as CDs, stocks, bonds, and government securities, available as part of the consolidated IRA.

Industry analysts say offering a range of investment options, easy-to- understand account statements, and smooth transfers are the keys to a successful IRA program.

Banks that take a less comprehensive approach to marketing IRAs may miss opportunities to win customers, said Ronald P. Thon, chairman of Bankers Pension Services, Tustin, Calif.

Customers may be reluctant to cash in investments from retirement plans in order to transfer the amount into CDs or other deposits, he explained.

And what if legislation to ease the tax rules for IRAs fails?

Banks that are building up their IRA product lines will still be in a position to reap new business, said Edward E. Furash, chairman of Furash & Co., a Washington consulting firm.

"There is an opportunity now to lock up some very long-term assets in these IRAs and to capture a lot of IRA rollover," Mr. Furash said. "People are coming out of retirement plans with a lot of cash and securities and they have to roll it over into something."

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