Consultant Says Regs Should Provide Alternative For Determining Interest Rate.

Lee J. Buchele of Halliwell Consulting Group, Pittsburgh, Pa., has commented that the proposed reg on valuation of plan distributions should provide an alternative for determining the interest rate to be used during the stability period. Buchele says that the rate could be based on an average or U.S. Treasury rates for some number of months, so that distributions are not unduly influenced by fluctuations in the published rates.

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May 9, 1995

CC:DOM:CORP:T:R (EE-12-95)

To Whom It May Concern:

The following comment relates to the temporary and proposed regulation concerning valuation of plan distributions, as published in the Federal Register on April 5, 1995.

The regulation provides that the interest rate to be used during the stability period is based on the U.S. Treasury rate for a single month (the lookback month). Regardless of how the lookback month is defined, the resulting rate is the rate in effect for a single calendar month.

I request that you consider making available another alternative. The rate would be based on an average of U. S. Treasury rates for some number of months. For example, the average of the rates for January through December of one calendar year would be used for the following calendar year. In this way, the resulting distribution would not be unduly influenced by fluctuations in the published rates.

If this approach were applied to 1995 distributions, the average rate for 1994 would be 7.37%. Assuming a stability period of one year, that rate would then be applied to distributions during 1994.

Thank you for your consideration.

Sincerely,

Lee J. Buchele