By CHRISTIE MARTIN and MAXWELL D. SOLET

After two sets of proposed regulations, Treasury and IRS have now released final regulations on the definition of “issue price” for purposes of arbitrage investment restrictions that apply to tax-advantaged bonds (the “Final Regulations”) and it appears that the third time’s the charm. Practitioners are particularly praising the addition of a special rule for determining issue price for competitive sales and clarification on determining issue price for private placements.  The Final Regulations were published in the Federal Register on December 9, 2016 and can be found here.

Several years ago, tax regulators became concerned that the longstanding practice of allowing an issue price to be calculated based on reasonable expectations could lead to abuse in that “reasonably expected” issue prices for bonds sometimes differed from the prices at which bonds were actually being sold to retail investors. A determination by the IRS that the “issue price” has been erroneously calculated can have ramifications for the calculation of arbitrage yield that could ultimately cause loss of tax-advantaged status.  A clear and predictable definition of issue price is therefore essential for the tax-advantaged bond community.

After the first set of proposed regulations, published in the Federal Register on September 16, 2013, caused an uproar in the bond counsel community as being largely unworkable, they were withdrawn and re-proposed on June 24, 2015 (the “2015 Proposed Regulations”). The 2015 Proposed Regulations were subject to a comment period followed by a public hearing.  These Final Regulations build on the 2015 Proposed Regulations with certain changes in response to the public comments.

The Final Regulations look to actual facts as the general rule for determining issue price. Generally, the issue price of bonds is the first price at which a substantial amount (at least 10%) of the bonds is sold to the public.  For bonds issued in a private placement to a single buyer, the Final Regulations clarify that the issue price of the bonds is the price paid by that buyer.

In recognition of the need in the tax-advantaged bond community for certainty as of the sale date (particularly in the case of advance refundings), the Final Regulations offer a special rule in the event a substantial amount of bonds has not been sold to the public as of the sale date. The special rule allows reliance on the initial offering price to the public if certain conditions are satisfied including evidence that the bonds were actually offered at the initial offering price and the written agreement of each underwriter that it will not offer or sell the bonds to any person at a price higher than the initial offering price during the period starting on the sale date and ending on the earlier of (i) the close of the 5th business day after the sale date, or (ii) the date on which the underwriters have sold at least 10% of the bonds to the public at a price that is no higher than the initial offering price.

Procedures for satisfying the conditions for use of this special rule will have to be developed but it is reasonable to expect that changes will need to be made to bond purchase agreements and underwriter selling agreements to comply with these requirements.

The special rule for competitive sales provides that in a competitive sale meeting certain requirements, an issuer may treat the reasonably expected initial offering price to the public as of the sale date as the issue price if the winning bidder certifies that its winning bid was based on this reasonably expected initial offering price as of the sale date. This special issue price rule for competitive sales has been repeatedly requested by practitioners and is a welcome improvement over the prior proposed regulations which treated both negotiated sales and competitive sales in the same manner.

The Final Regulations will be effective for obligations that are sold on or after June 7, 2017 and there is no option to rely upon the Final Regulations with respect to obligations that are sold prior to that date. This delayed effective date should allow bond counsel and underwriters time to develop effective and hopefully uniform procedures and documentation to implement the new regulations.

By LEN WEISER-VARON and BILL KANNEL

 

A draft of the U.S. Treasury’s proposed debt restructuring legislation began circulating earlier today.  The draft legislation would give Puerto Rico, as well as other U.S. territories, and their municipalities access to U.S. bankruptcy court under a new chapter of the U.S. Bankruptcy Code (so-called “Super Chapter 9”) as well as making Puerto Rico’s instrumentalities (but not Puerto Rico itself) potentially eligible to file for bankruptcy under existing Chapter 9. The prospects for bipartisan cooperation on some form of such legislation appear somewhat more promising than those for the confirmation of a new Supreme Court justice, but whether this trial balloon will fly remains uncertain.

Some initial observations:

  • The legislation would provide access to bankruptcy to Puerto Rico and other U.S. territories (Guam, American Samoa, Northern Mariana Islands and U.S. Virgin Islands) and their municipalities.
  • The availability of bankruptcy to a territory and/or any “municipality” (i.e. political subdivision, public agency, instrumentality or public corporation of a territory) would be conditioned on the establishment of a Fiscal Reform Assistance Council (Council) at the request of the applicable territory’s Governor.  The Council would consist of 5 members appointed by the President of the United States and would have to approve any such bankruptcy filing.  The Council would have a variety of oversight powers including budget and debt issuance approval powers.
  • The legislation preserves the concept of “special revenue” bonds that benefit from more protective provisions under Chapter 9, such as the continued application of a lien on special revenues to such revenues arising after the filing of the bankruptcy petition, and the inapplicability of the bankruptcy stay to the application of special revenues to payment of debt service on special revenue bonds.  However, the definition of “special revenues” is narrower under the draft legislation than it is under Chapter 9.  As under Chapter 9, “special revenues” include “receipts derived from the ownership, operation, or disposition of projects or systems of the debtor that are primarily used or intended to be used primarily to provide transportation, utility, or other services, including the proceeds of borrowings to finance the projects or systems.”  However, for Puerto Rico and other territories, the draft legislation would not include as “special revenues” “special excise taxes imposed on particular activities or transactions,”  “incremental tax receipts from the benefited area in the case of tax-increment financing,” “other revenues or receipts derived from particular functions of the debtor, whether or not the debtor has other functions” or “taxes specifically levied to finance one or more projects or systems, excluding receipts from general property, sales, or income taxes (other than tax-increment financing) levied to finance the general purposes of the debtor.”  Accordingly, debtors that under the legislation could file under either Chapter 9 or this new chapter would have an incentive to file under this new chapter if their revenues would constitute “special revenues” under Chapter 9 but not under the new chapter.
  • The legislation creates a one-year stay (from the date of establishment of a Council) on (i) the commencement or continuation of any action or proceeding that seeks to enforce a claim against the territory and (ii) the enforcement of a lien on “or arising out of” taxes or assessments owed the territory.  Note that the stay becomes effective without regard to whether a bankruptcy petition is filed.
  • A territory may be a debtor upon the establishment of a Council and approval of the filing by the Council.  A municipality of a territory must, in addition, be specifically authorized by territory law to be a debtor.
  • In contrast to Chapter 9, a debtor need not be insolvent in order to be eligible to file for bankruptcy under the proposed new chapter.
  • A territory and its municipalities may file bankruptcy petitions and plans of adjustment jointly.
  • If the debtor is a territory, the presiding judge in the bankruptcy is appointed by the Chief Justice of the U.S. Supreme Court.  If the debtor is a municipality filing separately from a territory, the presiding judge is appointed by the chief judge of the applicable federal circuit court of appeals (the 1st Circuit, in the case of Puerto Rico).
  • Among the various conditions for confirmation of a plan, noteworthy conditions include that “the plan does not unduly impair the claims of any class of pensioners.”  The draft legislation does not define what is meant by “unduly.”
  • The legislation provides a limited degree of protection for Puerto Rico’s general obligation bonds, including as a plan approval condition that “if feasible, the plan does not unduly impair” the claims of holders of the territory’s general obligation bonds that are “identified in applicable nonbankruptcy law as having a first claim on available territory resources.”   Notably, this protection is provided “if feasible” whereas there is no feasibility requirement on the protection of pensioner claims.  Again, the protection of general obligation bonds, “if feasible” is against being “unduly” impaired, without clarity as to what constitutes undue impairment.  Oddly, the implication is that general obligation bonds can be “unduly impaired” if it is not feasible to “duly” impair them.
  • The draft legislation makes many but not all of the general provisions of the Bankruptcy Code, many but not all of the provisions of Chapter 9, and some of the provisions of Chapter 11, particularly those relating to plan confirmation,  applicable to a bankruptcy involving a territory or a territorial municipality.

By LEN WEISER-VARON

The Stephen Beck, Jr., Achieving a Better Life Experience Act of 2014 (ABLE Act), one of the few recent examples of bipartisan cooperation on a new category of tax and budget expenditure, is both well-intentioned in its principles and cumbersome in its details, another example of the proposition that a camel is a horse designed by a committee.  Recent and imminent actions by regulators at the United States Treasury and Social Security Administration evidence commendable dedication to sanding off some of the rougher edges of the ABLE legislation.  Such beneficial regulatory guidance reflects, in both substance and timing,  extraordinary attention by federal regulators to concerns raised by the state instrumentalities charged with establishing and administering ABLE programs and by disability advocacy groups that have pushed and prodded to make this new form of savings and investment account for individuals with severe disabilities a reality.  Aided by this healthy cooperation among regulators, administrators and beneficiaries and the developments described below, ABLE programs should become available in various states during 2016.

  •  Treasury Issues Favorable Advance Guidance for ABLE Program Administrators

Treasury issued proposed ABLE regulations on June 29, 2015, has received comments on those regulations and is expected to publish a revised version of such regulations as final regulations when feasible taking into account the regulatory process.  It is anticipated that some ABLE programs will be launched in advance of the issuance of such final regulations.  However, the National Association of State Treasurers’ College Savings Plan Network (CSPN) (which now includes entities involved in establishing Section 529A ABLE programs as well as  entities involved with Section 529 college savings programs) had requested advance guidance from Treasury on three points which, if not resolved by Treasury prior to its issuance of final regulations, could have delayed the structuring and launching of ABLE programs.  On November 20, 2015, Treasury issued Notice 2015-81, providing such expedited advance guidance and agreeing with CSPN’s requested resolution on each of the three points.

In particular. Notice 2015-81 affirms that, notwithstanding contrary language in the proposed regulations, the final regulations under Internal Revenue Code Section 529A will provide that:

  1. An ABLE program will not be required to track or report the use of distributions from an ABLE account.  Although an ABLE program will need to report the amount of distributions and allocate distribution amounts to earnings or return of basis, it will not need to determine the amount of each distribution used by the account beneficiary for, respectively, non-housing qualified disability expenses,  housing-related qualified disability expenses, or expenses that are not qualified disability expenses.  The ABLE account beneficiary, however, will need to maintain records sufficient to allocate ABLE account distributions to qualified or non-qualified expenditures for tax purposes, and, in certain instances as discussed below, to  qualified non-housing, qualified housing or nonqualified expenditures for Supplemental Security Income (SSI) eligibility purposes.
  2. An ABLE program will not be required to request the social security number or other tax identification number (TIN) of each third party contributor to an ABLE account at the time a contribution is made, if (as will be the case for most if not all programs) the program has a system in place to identify and reject excess contributions and excess aggregate contributions before they are deposited into an ABLE account. (If, however, an excess contribution or excess aggregate contribution is deposited into an ABLE account, the qualified ABLE program will be required to request the TIN of the contributor making the excess contribution or excess aggregate contribution.)
  3. In instances where the ABLE statute conditions ABLE eligibility on the filing of a signed physician’s diagnosis of the relevant disability, an ABLE program will not be required to collect or review such physician diagnosis, but can rely on a certification under penalties of perjury that the individual (or the individual’s agent under a power of attorney or a parent or legal guardian of the individual) has the signed physician’s diagnosis, and that the signed diagnosis will be retained and provided to the ABLE program or the IRS upon request.  Notice 2015-81 indicates that the final regulations will “likely” require that such certification include the name and address of the diagnosing physician and the date of the diagnosis, and “may also provide” that the certification “may” include information provided by the physician as to the “categorization of the disability” that could determine, under the particular state’s program, the appropriate frequency of required recertification.   (The need for annual recertification is another sensitive topic from the perspective of state ABLE program administrators, but the proposed regulations suggest that the final regulations will be sufficiently flexible that states that do not wish to require annual recertification will not be obligated to do so.)  The Notice helpfully states that if the final regulations require more as to the signed physician diagnosis than the certification of its possession by the provider of the certification and that the diagnosis will be retained and provided to the ABLE program or the IRS upon request, such additional requirements will not apply to certifications obtained by an ABLE program prior to the effective date of such final regulations.

Appreciation is due to Catherine Hughes at Treasury and to Terri Harris and Sean Barnett at IRS for their attentiveness and responsiveness to the request for such advance guidance.

  •  Social Security Administration Expected to Issue Favorable Guidance for ABLE Beneficiaries

For SSI benefit recipients, the beneficial treatment of ABLE account balances and distributions for SSI eligibility purposes is at least as important as their beneficial tax treatment.  Although the Social Security Administration has yet to issue formal guidance clarifying that treatment, it is expected to do so through an update to its Program Operations Manual System (POMS) before the end of 2015.  Based on informal communications with and by SSA officials, the treatment is expected to facilitate the use of ABLE accounts without adverse impact on SSI benefits.

Broadly speaking, SSI benefits eligibility is reduced and may be eliminated to the extent the applicable beneficiary has countable assets or countable income in excess of extremely modest amounts.  However, the ABLE Act provides that ABLE account balances are disregarded for SSI purposes except to the extent they exceed $100,000, and that ABLE account distributions for qualified disability expenses also are disregarded except in the case of distributions for housing expenses.

The statutory exclusions leave some ambiguity as to the timing and methodology of determinations that particular ABLE account distributions are excluded from SSI benefits determinations.  The treatment expected to be described in the POMS update is as follows:  Distributions of ABLE account balances of $100,000 or less will not constitute countable income, as such amounts already are owned by the SSI beneficiary at the time of the distribution. Distributions from ABLE accounts will not constitute countable assets if expended within the same month as the distribution is received by the beneficiary from the account, irrespective of the nature of the expenditure.  Distributions from ABLE accounts that are not expended within the same month as the distribution is received by the beneficiary will not be counted as a countable asset if ultimately expended on a qualified disability expense that is not a housing expense.  An ABLE account distribution expended on a housing expense or non-qualified expense in a later month than the month in which the distribution is received may be treated retroactively as a countable asset in all months between distribution and expenditure, potentially requiring the beneficiary to refund SSI benefits received during that period.

Bottom line:  An SSI recipient should not experience any adverse impact from the existence of an ABLE account as long as the account balance is kept at or below $100,000 (probably measured as of each month end), and, subject to confirmation when the relevant POMS update is published by SSA, as long as distributions from the ABLE account are expended in the month of receipt.  Expending ABLE account distributions in a month subsequent to the month of receipt will not produce an adverse result if the expenditure is a qualified disability expense that is not a housing expense, but may create some risk to SSI benefits if the documentation of the expenditure is inadequate or the classification of the expenditure is debatable.

By MAXWELL D. SOLET

On November 13, the IRS issued Notice 2015-78, providing favorable guidance on topics of interest to providers of “supplemental” or “alternative” student loans financed with tax-exempt bonds and to underwriters of such student loan bonds. Such guidance confirms that loans financeable under such programs include (i) parent loans as well as student loans and (ii) loans that refinance or consolidate prior loans that were or could have been financed on a tax-exempt basis.

Tax-exempt bonds used to finance student loans, so-called “qualified student loan bonds,” come in two flavors under the Internal Revenue Code, those issued to finance federally-guaranteed loans made under the Federal Family Education Loan Program (“FFELP”) and those issued to finance certain loans issued under programs created by the states, generally known as “supplemental” or “alternative” loan programs. While the FFELP program, historically much larger, terminated in 2010, tax-exempt financing for new loans under state supplemental programs has continued in approximately fifteen states.

Notice 2015-78 appears to have been prompted by recent efforts by governmental issuers to provide refinancing of student loan debt through non-federally guaranteed “consolidation loans”, which presented questions on which the IRS had not previously provided guidance.  The IRS also used the notice as an opportunity to address selected other issues applicable to all tax-exempt financed supplemental loans, not just refinancing loans. The Notice clarifies the following:

  • Eligible Borrowers.  Notwithstanding the widespread practice of making higher education loans to parents, a practice provided for by statute under FFELP through the Parent Loan to Undergraduate Students (PLUS) program, the IRS had expressed concerns in the context of ruling request discussions about whether loans to parents were bond-financeable student loans.  Notice 2015-78 clarifies that the student, the parent, or both can be an eligible borrower of a bond-financed “student loan.”  The Notice attempts to provide a similar rule for refinancing loans, stating, “An eligible borrower of a refinancing loan … is the student or parent borrower of the original loan.”  In the refinancing loan context the Notice’s particular wording leaves unclear whether if the sole borrower on the original loan was the parent, the sole borrower on the refinancing loan can be the proud young graduate who wishes to take on the debt through a consolidation loan.  Such a fact pattern clearly satisfies the policy underlying this otherwise expansively drafted notice.
  • Nexus to State.  The Internal Revenue Code requires the student to be a resident of the state which provides the “volume cap” allocation for the bonds or enrolled at an educational institution in that state.  In the case of a refinancing or consolidation loan, there has been some question whether such “nexus” is required to be established at the time the original loan was made or at the time the refinancing loan is made.  The Notice provides the broadest rule, stating that a “refinancing loan,” including a loan which allows the borrower to consolidate prior debt, complies with the statutory nexus requirement either if that requirement was satisfied at the time of the original loan or if it is satisfied at the time of the refinancing loan.  If reliance is placed on nexus at the time the original loan is made,  in the case of a consolidation loan care may need to be exercised to establish nexus for all underlying loans.
  • Loan Size.  The Code limits supplemental loans to “the difference between the total cost of attendance and other forms of student assistance … for which the student borrower may be eligible.”  The “may be eligible” language has resulted in troublesome challenges in IRS audits, where IRS agents have suggested that issuers might be responsible for documenting that students actually had applied for all other potentially available student assistance, or obligated to downsize loans by the amount of other student assistance that was hypothetically available but not received by the student.  The Notice confirms that tax-exempt bond issuers may rely on certifications from the student’s school as to total cost of attendance and as to other student assistance.  Further, the school may rely on definitions provided under the Higher Education Act, including a definition of “estimated financed assistance” which looks only to assistance the student “will receive.”
  • Type of Loans Eligible for Refinancing.  The Notice states that supplemental student loan bonds can be used to refinance not only original loans which were themselves supplemental loans but also other loans, “for example, a FFELP loan or a student loan made by a private lender, provided that the refinancing loan meets all of the requirements for a State Supplemental Loan.”   Although not addressed by the Notice, it should be noted that tax-exempt bonds issued to refinance prior loans, including consolidation of prior loans, generally will require an allocation of state volume cap, which in some states is a scarce commodity.  The need for volume cap may be avoided to the extent the refinancing loans made with proceeds of a bond issue refinance loans financed with other tax-exempt bonds issued by the same issuer or a related issuer and the payoffs on the refinanced loans are applied to redeem such other tax-exempt bonds in a manner that qualifies for the volume cap exception for current refunding bonds.

As a general proposition, the national student loan market is growing and dynamic.  Notice 2015-78 will assist governmental issuers in fulfilling their intended role.

By MAXWELL SOLET and CHRISTIE MARTIN

Treasury and IRS today announced a decision to withdraw the much-criticized portion of the notice of proposed rulemaking published in the Federal Register on September 16, 2013 (the “2013 Proposed Regulations”) related to the definition of issue price for tax-advantaged obligations and to propose a revised definition of issue price in its place. A determination by the IRS that the “issue price” has been erroneously calculated can have ramifications, including for the calculation of arbitrage yield, that could ultimately cause loss of tax-exempt status in the case of tax-exempt bonds and loss of federal subsidy in the case of Build America Bonds (BABs), hence the importance to the tax-exempt bond community of a clear and predictable definition.

The new proposed regulations (the “2015 Proposed Regulations”) are scheduled to be published in the Federal Register on June 24, 2015 and can be found here. A 90-day comment period will be followed by a hearing on October 28, 2015.

The 2015 Proposed Regulations eliminate most of the troublesome features of the 2013 Proposed Regulations, including maintaining a 10% standard rather than the 2013 Proposed Regulations 25% standard for what constitutes a “substantial amount” of obligations sold to the public. However, the 2015 Proposed Regulations do not maintain the long-established “reasonable expectations” standard for establishing issue price. Instead, the 2015 Proposed Regulations look to actual facts as the general rule.

In recognition of the need in the tax-advantaged debt world for certainty as of the sale date (particularly in the case of advance refundings), the 2015 Proposed Regulations helpfully provide an alternative method in the event a substantial amount of bonds have not been sold to the public as of the sale date. The alternative method allows reliance on the initial offering price if certain conditions are satisfied.

Procedures for satisfying the conditions for use of this alternative method will have to be developed, and underwriters may conclude that compliance will be difficult. In particular, a preclusion of sales at prices above the initial offering price unless it can be demonstrated that the differential is based on market changes could be problematic.

The 2015 Proposed Regulations will be effective for obligations that are sold on or after 90 days after final regulations are published in the Federal Register. However, issuers may rely upon the 2015 Proposed Regulations with respect to obligations that are sold on or after June 24, 2015, the date the 2015 Proposed Regulations will be published in the Federal Register.

By LEN WEISER-VARON

Pi Day comes but once a century, on 3/14/15. The Internal Revenue Service receives praise approximately as frequently. But the IRS deserves applause for its Notice 2015-18, released March 10, 2015, giving the green light to states to proceed with the establishment of tax-free investment programs for the disabled under new Section 529A of the Internal Revenue Code.

Section 529A, which became effective January 1, 2015, grants tax-free treatment to the earnings in so-called ABLE accounts established for eligible disabled beneficiaries and used for qualified disability expenses. As is the case with Section 529 programs, which offer tax-free investment for higher education expenses, Section 529A programs must be established by state instrumentalities and must comply with a variety of statutory requirements. But unlike Section 529, which permits anyone to establish a Section 529 account (subject to the imposition of taxes and tax penalties on amounts withdrawn for purposes other than the account beneficiary’s higher education expenses), Section 529A imposes restrictions on the front end designed to ensure that the account beneficiary is disabled. (Section 529A likewise imposes taxes and tax penalties on amounts withdrawn for purposes other than the account beneficiary’s qualified disability expenses.)

Many families with children or other relatives who meet Section 529A’s disability definition and the statute’s requirement that the disability have occurred before age 26 are understandably eager to establish nest eggs that are not only tax-free but also, by statute, disregarded (up to a balance of $100,000) for purposes of determining the beneficiary’s financial eligibility for federal disability benefits. However, states seeking to make ABLE accounts available to their residents must work through a host of legal, contractual and investment option issues before launching these new programs.

By releasing Notice 2015-18, the Treasury Department and IRS have addressed, wisely and effectively, one factor that threatened to delay the launch of ABLE programs: uncertainty over how the Treasury Department and IRS will interpret certain provisions of Section 529A.

In particular, while Section 529A is clear that an ABLE account beneficiary’s disability qualification is determined by or through the federal government (through the beneficiary’s receipt of Social Security disability benefits or the beneficiary’s filing with the Treasury Department of a disability certification accompanied by a physician’s diagnosis), it is silent on whether the state program has some unspecified duty to obtain assurances or confirm that such actions, which don’t involve the state program, have occurred. Section 529A, which permits disability status to be established at any time during a tax year, also does not specify the treatment of account contributions made to or received by an ABLE account on a date in a tax year that precedes the date on which the beneficiary satisfies the disability status requirements for the applicable tax year. In addition, there is no statutory clarity on what a program is required to do to confirm compliance with Section 529A’s state residency restrictions.

The legislation pursuant to which Section 529A was enacted requires that the Treasury Department promulgate regulations under Section 529A by June 19, 2015 (six months from enactment.) It is unclear whether the Treasury Department will be able to meet this deadline. Even if the Treasury Department were to meet that deadline, some states might have concerns about structuring, much less launching, an ABLE program before there is regulatory guidance resolving some of the statutory ambiguities potentially affecting the program’s tax-exemption under Section 529A.

Notice 2015-18 straightforwardly acknowledges the tax uncertainty concerns and addresses them, asserting that “[t]he Treasury Department and the IRS do not want the lack of guidance to discourage states from enacting their enabling legislation and creating their ABLE programs, which could delay the ability of the families of disabled individuals or others to begin to fund ABLE accounts for those disabled individuals.” The Notice goes on to state that “the Treasury Department and the IRS are assuring states that enact legislation creating an ABLE program in accordance with section 529A, and those individuals establishing ABLE accounts in accordance with such legislation, that they will not fail to receive the benefits of section 529A merely because the legislation or the account documents do not fully comport with the guidance when it is issued.”

The Notice further states that “the Treasury Department and the IRS intend to provide transition relief with regard to necessary changes to ensure that the state programs and accounts meet the requirements in the guidance, including providing sufficient time after issuance of the guidance in order for changes to be implemented.”

This language represents a fairly extraordinary expression by the Treasury and the IRS of their intent to get out of the way as a potential obstacle to, or delaying factor in, the launching of ABLE programs. This approach is sympathetic to the cause and needs of families of disabled individuals, and deserves commendation. Although the Notice will not result in instantaneous availability of ABLE programs given the non-tax complexities of structuring the programs, it makes the states’ task in launching such programs appreciably less daunting.

Notice 2015-18 also includes an advance notice which acknowledges that, although Section 529A requires that the disabled beneficiary of an ABLE account be the account owner, someone other than the disabled beneficiary may have signature authority for the account. The advance notice, unsurprisingly, indicates that the regulatory guidance when issued will preclude any such person with signature authority who is not the account owner from acquiring a beneficial interest in the account, and will require such person to administer the account in the interests of the account owner/beneficiary.