United States Internal Revenue Service, Creditor-Appellee v. Donald Snyder, Debtor-Appellant

The question in this case is whether an IRS claim for delinquent taxes secured outside of bankruptcy by a lien on a debt- or’s interest in an ERISA-qualified pension plan is secured in bankruptcy “by a hen on property in which the bankruptcy estate has an interest” under 11 U.S.C. § 506 (a). This question has divided the courts that have considered it. We hold that such a claim is not secured within the meaning of § 506(a) because a debtor’s interest in an ERISA-qualified plan is excluded from the bankruptcy estate pursuant to 11 U.S.C. § 541 (c)(2).

I. Background

Debtor-Appellant Donald Snyder is a vested participant in an ERISA-qualified pension plan. See Employment Retirement Income Security Act of 1974, 26 U.S.C. § 401 et seq., 29 U.S.C. § 1001 et seq. In accordance with the requirements set forth in 26 U.S.C. § 401 (a)(13)(A) and 29 U.S.C. § 1056 (d)(1), the pension plan contains-an anti-alienation clause. It provides:

Snyder’s pension — that is, his interest in the plan — currently has a balance of about $200,000, but it is not yet in pay-out status. Snyder (or his surviving spouse or designated beneficiary) will begin receiving ben efit payments under the plan…