in re: Raymond Adams v. ( 2003 )


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  •             ELECTRONIC CITATION: 
    2003 FED App. 0006P (6th Cir.)
    File Name: 03b0006p.06
    BANKRUPTCY APPELLATE PANEL OF THE SIXTH CIRCUIT
    In re: RAYMOND L. ADAMS and
    JANET M. ADAMS,
    Debtors.
    SUSAN L. RHIEL, Trustee,
    Appellant,
    v.                                                   No. 03-8011
    RAYMOND L. and JANET M. ADAMS,
    Appellees.
    Appeal from the United States Bankruptcy Court
    for the Southern District of Ohio, Eastern Division.
    No. 01-61636
    Argued: August 6, 2003
    Decided and Filed: December 10, 2003
    Before: BODOH, COOK, and LATTA, Bankruptcy Appellate Panel Judges.
    ________________
    COUNSEL
    ARGUED: Susan L. Rhiel, RHIEL & ASSOCIATES CO., Columbus, Ohio, for Appellant.
    Eleanor Beavers Haynes, Columbus, Ohio, for Appellees. ON BRIEF: Susan L. Rhiel,
    RHIEL & ASSOCIATES CO., Columbus, Ohio, for Appellant. Eleanor Beavers Haynes,
    Columbus, Ohio, Mark Ditullio, Columbus, Ohio, for Appellees.
    1
    _______________
    OPINION
    _______________
    JOHN C. COOK, Bankruptcy Appellate Panel Judge. This case is before us on the
    bankruptcy Trustee’s appeal from a ruling of the bankruptcy court that the Debtors, Mr. and
    Mrs. Raymond Adams, were the beneficiaries of trusts with enforceable transfer restrictions
    such that their beneficial interests in those trusts were excluded from their bankruptcy
    estate under 
    11 U.S.C. § 541
    (c)(2). Because we conclude that the Debtors failed to carry
    their burdens of proof that they were beneficiaries of trusts within the meaning of 
    11 U.S.C. § 541
    (c)(2), we REVERSE the bankruptcy court’s order and REMAND the case for further
    proceedings.
    I. ISSUES ON APPEAL
    The principal issue in this case is whether the bankruptcy court erred when it
    concluded that the Debtors’ § 403(b) annuity plans constitute trusts within the meaning of
    
    11 U.S.C. § 541
    (c)(2).
    II. JURISDICTION AND SCOPE OF REVIEW
    The panel has jurisdiction to decide this appeal under 
    28 U.S.C. §158
    (a)(1) because
    the United States District Court for the Southern District of Ohio has authorized appeals
    to the Bankruptcy Appellate Panel of the Sixth Circuit.
    The bankruptcy court’s determination that the assets of these pension plans were
    excluded from the bankruptcy estate by operation of § 541(c)(2) is a conclusion of law
    which is reviewed de novo. Nicholson v. Isaacman (In re Isaacman), 
    26 F.3d 629
    , 631 (6th
    Cir. 1994). A court’s findings of fact are accepted by appellate courts unless they are
    clearly erroneous. Fed. R. Civ. P. 52; Fed. R. Bankr. P. 8013.
    III. FACTS
    The Debtors, Mr. and Mrs. Raymond Adams, each has an interest in a separate
    retirement plan, both of which are qualified under 
    26 U.S.C. § 403
    (b) as tax-sheltered
    annuity pension plans. Both plans contain anti-alienation clauses (transfer restrictions) that
    prevent the Debtors from reaching the assets of their pension funds until they are 59½
    years of age. There are certain hardship exceptions to this general rule, but none have so
    2
    far applied. No creditors can reach the assets of the Debtors’ pension plans under the
    terms of the anti-alienation clauses.
    The plans have similar structures. Mr. Adams’s pension plan, established by his
    employer, the United Negro College Fund, provides that the employer will forward a certain
    percentage of his salary to one or more of the fund’s sponsors, Teachers Insurance and
    Annuity Association, College Retirement Equities Fund, or the Equitable Life Assurance
    Society of the United States. The sponsors are to establish separate “accumulation
    accounts” for each plan participant, accumulate the plan contributions in those accounts,
    and afford the plan participant an opportunity to invest in various vehicles, such as stock
    funds, made available to him by the sponsors. Mr. Adams has sole authority to direct how
    his account shall be invested. Benefits may not be paid to him until he attains the age of
    59½ and separates from the service of his employer, dies, or becomes disabled. Finally,
    paragraph 10.5 of the plan incorporates by reference the terms of each “funding vehicle”
    provided by the sponsor and provides that they control in case they conflict with the terms
    of the plan. From a certificate issued by Equitable Life Assurance Society which appears
    in the appendix, it appears that Mr. Adams has chosen Equi-Vest (an investment arm of
    Equitable) as his fund sponsor and has allocated his contributions among several stock
    mutual funds and an interest-bearing account.
    Mrs. Adams’s pension plan document is similar to her husband’s, except that her
    employer is Children’s Hospital, Inc., the accumulation accounts are called “elective
    deferral accounts,” and the eligibility for benefits, including the time when they become
    payable, is controlled by the fund sponsors. These sponsors are not named in the pension
    plan. Paragraph 11.5 of the plan provides that the “terms of the contracts between the
    Fund Sponsors and the Employer and/or the Participants and any certificates issued to a
    Participant in accordance with the provisions of Section 5.1 are a part of the Plan as if fully
    set forth in the Plan document.” The appendix does not contain any of the contracts
    between the plan administrators and the fund sponsors, and there is no information
    available in the record on that subject. The appendix does, however, contain part of a
    certificate issued by Aetna Life Insurance and Annuity Co. confirming that Mrs. Adams is
    a participant in its group annuity contract. The certificate appears to be incomplete, and
    no details are given as to how Aetna holds contributions made under the plan.
    IV. DISCUSSION
    The bankruptcy court held that both of the pension plans in question were excluded
    from property of the estate by § 541(c)(2), which reads: “A restriction on the transfer of a
    3
    beneficial interest of the debtor in a trust that is enforceable under applicable
    nonbankruptcy law is enforceable in a case under this title.” 
    11 U.S.C. § 542
    (c)(2). The
    court stated in its memorandum that “the plans are ‘ERISA-qualified’ as contemplated by
    the Supreme Court in Patterson v. Shumate. As such, they are not property of the estate,
    and are not subject to administration by the Trustee.” (Emphasis added.) Thus, there is
    some indication that the court thought the only criterion for excluding the assets of a
    pension plan from the estate under § 541(c)(2) was whether the plan in question was
    ERISA-qualified.
    The Sixth Circuit, however, requires that there be a trust: “An inquiry under
    § 541(c)(2) normally has three parts: First, does the debtor have a beneficial interest in a
    trust?” Wilcox v. Gen. Ret. Sys. (In re Wilcox), 
    233 F.3d 899
    , 904 (6th Cir. 2000).
    Thus, the Trustee argues that the bankruptcy court glossed over the trust requirement in
    § 541(c)(2) and contends that the plain terms of the statute exclude from property of the
    estate only a debtor’s beneficial interest in a trust, not necessarily his interest in a pension
    plan, or ERISA-qualified pension plan, or anything other than a trust.
    In a lengthy discussion of this subject in In re Barnes, 
    264 B.R. 415
    , 423 (Bankr.
    E.D. Mich. 2001), Bankruptcy Judge Spector recognized that some courts appear to have
    adopted the proposition that
    an employee benefit plan need not be a trust at all: So long as the plan has
    an enforceable transfer restriction and is designed to function in a manner
    “analogous” to a spendthrift trust, the debtor’s interest therein will be
    excluded from the bankruptcy estate pursuant to § 541(c)(2).
    Id. The court then disagreed with that view and insisted that proof of a trust was essential
    to exclusion under § 541(c)(2).
    This Court rejects that proposition. There is no statutory support for the
    notion that in determining whether a trust was created, employee benefit
    plans are subject to a less stringent standard than are other assets in which
    the debtor holds an interest. Since § 541(c)(2) makes no distinction along
    these lines, neither should the courts.
    Id. at 428 (citation omitted). We agree with and adopt the views in Barnes regarding the
    trust requirement of § 541(c)(2) and, following Wilcox, hold that only an interest in a trust
    can be the subject of an enforceable transfer restriction within the meaning of 
    11 U.S.C. § 541
    (c)(2).
    The bankruptcy court also briefly stated in its memorandum that “a review of both
    plans reveals that the funds, even though being invested in tax sheltered annuities, are
    being held in trust for the Debtors’ retirement.” Unfortunately, the court did not explain this
    4
    conclusion or support it with any discussion of the terms of the plans, contracts, accounts,
    or annuities such as might have caused the court to view them as trusts. Neither did it
    offer any discussion of the legal elements of a trust or how the Debtors proved any of those
    elements. There is only the bare conclusion that some trusts exist.
    The Debtors bear the burden of demonstrating that all the requirements of
    § 541(c)(2) have been met before the property in question can be effectively excluded from
    the estate. Id. at 420-21; Pineo v. Fulton (In re Fulton), 
    240 B.R. 854
    , 861 n. 4 (Bankr.
    W.D. Pa. 1999). The Debtors, therefore, must show that the property in question is the
    subject of a trust of which they are beneficiaries. We think it is far from self-evident that
    the plans in this case constitute trusts, a critical finding for exclusion from the bankruptcy
    estate. Although they were probably drafted by attorneys, there is no mention of a trust,
    much less the appointment of a trustee. There are no formal grants in trust. There is no
    direct manifestation of any intent to create a trust in anyone.
    The term “trust” is a term of art and has a specific legal meaning. In Ohio, a trust
    is created by
    “an explicit declaration of trust, or circumstances which show beyond
    reasonable doubt that a trust was intended to be created, accompanied with
    an intention to create a trust, followed by an actual conveyance . . . of
    definite property . . . vesting the legal title presently in a person capable of
    holding it, to hold as trustee for the benefit of a cestui que trust.”
    Ulmer v. Fulton, 
    195 N.E. 557
    , 564 (Ohio 1935) (quoting 65 C.J. § 21); accord, Booth v.
    Vaughan (In re Booth), 
    260 B.R. 281
    , 290-91 (B.A.P. 6th Cir. 2001). The Restatement
    defines a trust in similar terms as
    [a] fiduciary relationship with respect to property, arising from a manifestation
    of intention to create that relationship and subjecting the person who holds
    title to the property to duties to deal with it for the benefit of charity or for one
    or more persons, at least one of whom is not the sole trustee.
    Restatement (Third) of Trusts § 2 (2003) (emphasis added).
    As we have mentioned, the bankruptcy court did not attempt to explain why the
    pension plans in question constituted trusts. When we examine these plans ourselves, we
    are left in considerable doubt about whether any trusts are involved. We have more
    information about Mr. Adams’s plan than Mrs. Adams’s, and so we will take it up first. In
    addition to the plan document, which establishes the relationship between Mr. Adams and
    his employer vis-a-vis his pension, we have an Equi-Vest certificate of participation from
    which we can derive some information about how the plan might work. The mechanism
    5
    described in the certificate is more complex than the outright purchase of an annuity under
    normal circumstances.
    The Equi-Vest certificate provides that the contributions made to the plan by Mr.
    Adams and his employer become the property of Equitable Life Assurance Society of the
    United States. A “Contract is issued in consideration of the payment to Equitable of the
    Contributions made under the Contract.” Furthermore, according to the certificate, “[a]n
    annuity is purchased for a person enrolled under the Contract upon receipt by Equitable
    of an initial Contribution by the Employer.” The annuity contract is funded by contributions
    which are allocated among various investment vehicles such as mutual funds or money
    funds made available by Equitable, and the allocation is made solely at the direction of Mr.
    Adams. These mutual funds are held in a “Separate Account” apart from Equitable’s
    general accounts. At his retirement date, Mr. Adams can select either an “annuity benefit”
    or a “cash value benefit.” The annuity benefit includes any annuity offered by Equitable,
    including both fixed and variable annuities.
    To all intents and purposes, then, Mr. Adams’s pension plan provides for the
    purchase of an annuity with funds forwarded by his employer to Equitable. The value of
    the benefit Mr. Adams eventually receives depends on the amounts he contributes to
    Equitable and the success of his investment decisions prior to his retirement. If Mr.
    Adams’s plan contributions are premium payments and he is merely an annuitant, it is
    difficult to view the plan as a trust. The purchase of an annuity ordinarily creates the
    relationship of debtor/creditor, not trustee/beneficiary, Hughes v. Sun Life Assur. Co., 
    159 F.2d 110
    , 113 (7th Cir 1946); In re Riley, 
    91 B. R. 389
    , 390-91 (Bankr. E.D. Va. 1988), and
    “[a] debt is not a trust.” Restatement (Second) of Trusts § 12 (2003). Under these
    circumstances, we may well wonder whether the debtors have carried their burdens of
    showing the existence of trusts.
    The debtors argue essentially that any ERISA-qualified plan must be a trust. Turning
    to the applicable statutes, however, we note that there is nothing in either ERISA or the
    Internal Revenue Code that mandates the conclusion that these plans involve trusts. Both
    pension plans are drawn specifically to meet the requirements of 
    26 U.S.C. § 403
    (b), and
    both explicitly so state. Section 403 is headed, “Taxation of Employee Annuities” and
    provides in pertinent part as follows:
    If an annuity contract is purchased . . . then contributions and other additions
    by such employer for such annuity contract shall be excluded from the gross
    income of the employee for the taxable year. . . . The amount actually
    distributed to any distributee under such contract shall be taxable to the
    6
    distributee (in the year in which so distributed) under section 72 (relating to
    annuities).
    (Emphasis added.) Thus, employee benefit plans involving annuity contract purchases,
    as well as those involving trusts, may qualify for special tax treatment under ERISA.
    The Internal Revenue Code also permits employers to contribute salary deductions
    from employees to custodial accounts in regulated investment companies:
    (7) Custodial accounts for regulated investment company stock.—
    (A) Amounts paid treated as contributions.—For purposes of this title,
    amounts paid by an employer described in paragraph (1)(A) to a custodial
    account which satisfies the requirements of section 401(f)(2) shall be treated
    as amounts contributed by him for an annuity contract for his employee if—
    (i) the amounts are to be invested in regulated investment
    company stock to be held in that custodial account, and
    (ii) under the custodial account no such amounts may be paid
    or made available to any distributee before the employee dies, attains age
    59½, has a severance from employment, becomes disabled (within the
    meaning of section 72(m)(7)), or in the case of contributions made pursuant
    to a salary reduction agreement (within the meaning of section 3121(a)
    (1)(D)), encounters financial hardship.
    (B) Account treated as plan.—For purposes of this title, a custodial
    account which satisfies the requirements of section 401(f)(2) shall be treated
    as an organization described in section 401(a) solely for purposes of
    subchapter F and subtitle F with respect to amounts received by it (and
    income from investment thereof).
    (C) Regulated investment company.—For purposes of this paragraph,
    the term “regulated investment company” means a domestic corporation
    which is a regulated investment company within the meaning of section
    851(a).
    
    26 U.S.C. § 403
     (b)(7) (emphasis added). The reference to § 401(f)(2) is significant
    because the latter provides generally that certain custodial accounts and annuity contracts
    are to be treated as qualified trusts, even though they are not trusts, but only for the
    purposes of Title 26, the Internal Revenue Code.
    (f) Certain custodial accounts and contracts.—For purposes of this title, a
    custodial account, an annuity contract, or a contract (other than a life, health
    or accident, property, casualty, or liability insurance contract) issued by an
    insurance company qualified to do business in a State shall be treated as a
    qualified trust under this section if —
    (1) the custodial account or contract would, except for the fact that
    it is not a trust, constitute a qualified trust under this section, and
    (2) in the case of a custodial account the assets thereof are held by
    a bank (as defined in section 408(n)) or another person who demon-
    strates, to the satisfaction of the Secretary, that the manner in which
    he will hold the assets will be consistent with the requirements of this
    section.
    For purposes of this title, in the case of a custodial account or contract
    treated as a qualified trust under this section by reason of this subsection,
    7
    the person holding the assets of such account or holding such contract shall
    be treated as the trustee thereof.
    
    26 U.S.C. § 401
    (f)(emphasis added). Under § 401(a), a qualified trust is (a) a trust that
    features (b) employer/employee contributions for the benefit of an employee and (c) an
    anti-alienation provision. For purposes of the Internal Revenue Code, therefore, § 401(f)
    allows certain custodial accounts or annuities having the (b) and (c) features, but not being
    trusts, to be treated as qualified trusts. Again, that special treatment is expressly limited
    to the Internal Revenue Code and so does not apply at all to the Bankruptcy Code.
    For its part, ERISA generally requires that all assets of an employee benefit plan be
    held in trust. Indeed, 
    29 U.S.C. § 1103
    (a) explicitly provides: “Except as provided in
    subsection (b) of this section, all assets of an employee benefit plan shall be held in trust
    by one or more trustees.” If a pension plan is subject to or governed by ERISA, it usually
    complies with ERISA’s trust requirement and thus satisfies the trust requirement of
    § 541(c)(2). However, ERISA specifically exempts § 403(b) annuity plans from ERISA’s
    trust requirement:
    The requirements of subsection (a) of this section shall not apply . . . to a
    contract established and maintained under section 403(b) of Title 26 to the
    extent that assets of the contract are held in one or more custodial accounts
    pursuant to section 403(b)(7) of Title 26.
    
    29 U.S.C. § 1103
    (b)(5). Thus, ERISA itself does not require that the assets of § 403(b)
    plans be held in a trust.
    The reason for this exception to the trust requirement is illuminating. Since 1942,
    and long before the enactment of ERISA, there has been a tax statute, in one form or
    another, that allowed employees of certain charitable organizations to defer income under
    a tax-sheltered annuity arrangement. Revenue Act of 1942, ch. 619, § 162, 56 stat. 798
    (codified as amended in scattered sections of 26 U.S.C.). Section 403(b) of the Internal
    Revenue Code was added by Congress in 1958 in order to restrict the amount of
    compensation deferrable under such annuity arrangements, since some charitable
    employers were “paying selected employees all, or almost all, of their compensation in the
    form of annuities.” H.R. Rep. No. 775, 85th Cong., 1st Sess. 15, 16 (1957). Section
    403(b) continued the deferral, but provided a formula for limiting the amount deferred
    according to the employee’s compensation and length of service. No trust was required
    or employed as a part of these tax-sheltered annuity arrangements.
    It stands to reason that when ERISA was first proposed as a comprehensive piece
    of legislation to govern pension plans in the United States, the insurance companies,
    8
    having done a good business selling retirement annuities to charitable organizations,
    wished to keep that business. Since insurance companies are in the business of selling
    contracts, not acting as trustees, it was necessary for them to obtain an exception from
    ERISA’s general rule that plan assets were to be held in trusts. In effect, the previous
    practice of the insurance companies was grandfathered in. Under the new ERISA, as
    Congress made clear,
    A trust is not to be required in the case of plan assets which consist of
    insurance (including annuity) contracts or policies issued by an insurance
    company qualified to do business in a State (or the District of Columbia).
    The same exemption will apply to the new section 403(b) custodial account
    arrangement involving investment in mutual funds, since these are treated
    as amounts contributed for an annuity contract under the tax law. Although
    these contracts need not be held in trust, nevertheless, the person who holds
    the contract is to be a fiduciary and is to act in accordance with the fiduciary
    rules of the substitute [bill of the conference committee] with respect to these
    contracts. For example, this person is to prudently take and keep exclusive
    control of the contracts, and is to use prudent care and skill to preserve this
    property.
    To the extent that plan assets are held by an insurance company they
    need not be held in trust.
    Subcommittee on Labor of the Senate Committee on Labor and Public Welfare, 93rd
    Cong. 2d Sess., Report on Employee Retirement Income Security Act, Pub. L. No. 93-406
    (Comm. Print 1974) (emphasis added). This statement shows that an employer, although
    he holds the annuity contracts for safekeeping and is a fiduciary under ERISA, need not
    be a trustee. Furthermore, the insurance company involved in the plan need not be a
    trustee under ERISA. If this is so, then this kind of tax-sheltered annuity plan can be
    carried out without any trustee at all, as historically it was.
    Indeed, many states forbid insurance companies from being, or holding themselves
    out to be, trustees with respect to their separate accounts. The New York statute
    applicable to Equitable, for instance, states:
    Amounts allocated by the insurer to separate accounts shall be owned by the
    insurer, the assets therein shall be the property of the insurer, and no insurer
    by reason of such accounts shall be or hold itself out to be a trustee.
    
    N.Y. Ins. Law § 4240
    (a)(12) (McKinney 2000).1
    1
    The partial certificate covering Mrs. Adams indicates that Aetna’s separate accounts
    are subject to the laws of Connecticut. These are virtually identical to New York’s laws and
    specifically provide that “amounts allocated to a separate account in the exercise of the
    power granted by this section shall be owned by the company, and the company shall not
    be, nor hold itself out to be, a trustee with respect to such amounts.” Conn. Gen. Stat. Ann.
    (continued...)
    9
    If there are serious questions about whether Equitable is a trustee under the plan,
    there are equally serious questions about whether the employer may be a trustee.
    Nowhere in the plan or the certificate is it called one. It may be a fiduciary insofar as it is
    the custodian of the insurance contracts, as the Subcommittee on Labor observed, but,
    according to the Equitable’s certificate, once the first payment is made on behalf of an
    employee, Equitable issues an annuity and all further dealings of any substance are
    between Equitable and the employee. In fact, the employer is little more than a conduit
    or forwarding agent acting on the employee’s behalf to withhold and send off the annuity
    payments. Once the employer has forwarded the payment, it has no control over the
    money or the accounts into which the payment is invested, and it has no control over how
    the benefits are ultimately paid out to the employee. This being the case, the plan may be
    viewed as a device operating primarily under principles of agency rather than those of trust.
    Even if there is a mixture of trust and agency principles involved, the agency principles may
    predominate:
    A person may be both agent of and trustee for another. If he undertakes to
    act on behalf of the other and subject to his control, he is an agent; but if he
    is vested with the title to property which he holds for his principal, he is also
    a trustee. In such a case, however, it is the agency relation that predomi-
    nates, and the principles of agency, rather than the principles of trust, are
    applicable. This is the case, for example, where the title to bonds or shares
    of stock or other securities is vested in a person who undertakes to hold
    subject to the directions of the person who caused the property to be vested
    in him. He is an agent since he is acting subject to the control of another,
    even though he is also trustee since he is vested with the title to the property.
    Where an agent receives money for his principal, he acquires the legal title
    to the money according to the view that title to money passes with the
    possession of it; but he is nonetheless an agent, and the principles of agency
    are applicable.
    Austin Wakeman Scott and William Franklin Fratcher, The Law of Trusts § 8 (4th ed. 1987)
    (emphasis added). It is thus quite possible that the employer is only the agent, not the
    trustee, of the employee. Since the federal statutory framework does not compel, or even
    imply, the existence of a trustee in plans funded by tax-sheltered annuities, and since such
    plans can easily be operated without the use of a trustee, as indeed it appears they usually
    were, it is difficult to see how Mr. Adams has carried his burden of proving that there is real
    trust involved in this case. The law, the plan documents, and historical practice all seem
    to lean the other way.
    (...continued)
    § 38a-433(a) (West 2000).
    10
    While we have doubts about the existence of a trust in Mr. Adams’s plan, we are
    even more doubtful about Mrs. Adams’s plan because we have even less information
    about its operation. The partial Aetna certificate in evidence does not describe what kind
    of annuity she may have purchased or how her contributions are held or invested. We
    have only the plan document which does not mention trust or trusteeship and speaks in
    terms too general for us to determine exact relationships or whether any trust is involved.
    There are two possible bases for the bankruptcy court’s decision in this case. First,
    the court may have relied on a per-se rule that any ERISA-qualified plan constituted a trust
    for bankruptcy purposes as a matter of law. We reject such a rule for reasons we have
    pointed out above. Second, the bankruptcy court may have based its ruling on a finding
    that the Debtors’ plans actually involve real trusts. In that case, we are unable to see how
    such a finding might be justified given the relatively complete lack of evidence of any trust
    anywhere. No trust or trustee is mentioned in either of the plans or the certificates issued
    by the insurance companies, there is no evidence that either Debtor intended the creation
    of a trust, the federal statutes that apply to this kind of pension plan exempt it from any
    trust requirement, and the state statutes that regulate insurers who participate in such
    plans specifically prohibit the insurers from being trustees. Under these circumstances,
    we must hold that both Debtors have failed to carry their burdens of proof under 
    11 U.S.C. § 541
    (c)(2) in that they failed to show they were beneficiaries of trusts.
    The dissent argues that § 541(c) of the Bankruptcy Code and § 1056(d)(1) of ERISA
    (requiring pension plans to contain anti-alienation clauses) are in conflict and that ERISA
    should prevail. We disagree and find no legal conflict between the statutes because each
    can be applied without interfering with the other. ERISA requires that most pension plans
    contain an anti-alienation clause, but it does not purport to describe the legal effects of
    such a clause under all circumstances. The Bankruptcy Code specifically provides that
    the debtor’s interest in property becomes property of the estate “notwithstanding any
    provision in an agreement, transfer instrument, or applicable nonbankruptcy law . . . that
    restricts or conditions transfer of such interest by the debtor . . . .” 
    11 U.S.C. § 541
    (c)(1).
    A pension plan is “an agreement” and ERISA is “applicable nonbankruptcy law.” Thus the
    Bankruptcy Code contains a provision that acts as a kind of enzyme within the medium of
    the Bankruptcy Code: it undoes all anti-alienation clauses except those appurtenant to
    trusts. 
    11 U.S.C. § 541
    (c)(2). Simply because one statute undoes the effect of another
    in a special area does not mean the statutes are in conflict. We think there is no conflict
    between these statutes, and in any case the bankruptcy statute is the more specific of the
    11
    two because it deals not just with anti-alienation clauses but with their effects in the specific
    situation of a bankruptcy.
    In order to find a conflict, then, the dissent seeks the higher plane of policy and
    argues that “important policy considerations” and “[t]he goal of ERISA” require us to
    expand the language of § 541(c)(2) beyond trusts. Considering that Congress could easily
    have done this by adding a few words to § 541(c)(2), which was enacted some four years
    after ERISA became law, we are hesitant to conclude that their absence is certainly an
    oversight. We are also reluctant to conclude that the supposed policy balance is so
    lopsided that we must, as a court, rewrite black letter law. First, as a court, we are not
    familiar with all the policy implications of a very complex legislative scheme involving
    pension and tax law. Second, we have been repeatedly warned that a “policy question,
    involving, as it does, many weighty and conflicting considerations, must be resolved
    through the [legislative] process and not by judicial decision.” United States v. Robinson,
    
    361 U.S. 220
    , 229, 
    80 S. Ct. 282
    , 288 (1960). Thus, courts simply do not have the power
    to resolve pure policy questions. This is especially true when it comes to rewriting statutes
    with the intention of improving them.
    [P]etitioner argues that prohibiting a district court from granting a motion for
    judgment of acquittal filed one day late will lead to needless appeals and
    habeas corpus proceedings, where it will be more difficult for defendants to
    obtain relief than in motions directed to the trial court. Assuming, arguendo,
    that these contentions are accurate, we cannot permit them to alter our
    analysis, for we are not at liberty to ignore the mandate of Rule 29 in order
    to obtain “optimal” policy results. We are similarly unmoved by petitioner’s
    contention that the “rationale” behind Rule 29(c)’s time limit does not apply
    where the motion for judgment of acquittal is filed a mere eight days after the
    trial. The only evident “rationale” behind Rule 29(c)’s 7-day time limit is that
    a motion for judgment of acquittal filed eight days after trial is a motion filed
    one day later than justice and equity demand.
    Carlisle v. United States, 
    517 U.S. 416
    , 430, 
    116 S. Ct. 1460
    , 1468 (1996) (citation
    omitted); accord Commissioner v. Lundy, 
    516 U.S. 232
    , 252, 
    116 S. Ct. 647
    , 650 (1996)
    (“We are bound by the language of the statute as it is written . . . even if the rule [petitioner]
    advocates might ‘accor[d] with good policy . . . .’”); Badaracco v. Commissioner, 
    464 U.S. 386
    , 398, 
    104 S. Ct. 756
    , 764 (1984) (“Courts are not authorized to rewrite a statute
    because they might deem its effects susceptible of improvement.”).
    The dissent would like us to amend § 541(c)(2) so as to read: “A restriction on the
    transfer of a beneficial interest of the debtor in a trust or ERISA-qualified pension plan that
    is enforceable under applicable non-bankruptcy law is enforceable in a case under this
    12
    title.” We believe that if there are to be any changes in the language of § 541(c)(2) such
    changes must be made by Congress, not by the courts.
    V. CONCLUSION
    For the foregoing reasons, we REVERSE the bankruptcy court’s order that is the
    subject of this appeal and REMAND the case for further proceedings.2
    2
    The bankruptcy court decided the § 541(c)(2) issue in connection with overruling the
    Trustee’s objection to the Debtors’ claims of exemptions in the pension plans. The court
    no doubt thought that its ruling on the § 541(c)(2) issue rendered moot all other issues
    relating to the Debtors’ claims of exemptions in the plans. However, because the Debtors’
    have failed to prove that their interests in their pension plans should be excluded from
    property of the estate under § 541(c)(2),the bankruptcy court must now consider the
    remaining issues that relate to the Debtors’ claims of exemptions in their pension plans,
    and the Trustee’s objection thereto.
    13
    JENNIE D. LATTA, Bankruptcy Appellate Panel Judge, dissenting. I agree with the
    majority that the Debtors have failed to prove that their pension plans constitute trusts. In
    fact, I would put the matter more strongly – the Debtors’ pension plans manifestly are not
    trusts. Because I do not believe, however, that the presence of an express trust is required
    to exclude an ERISA-qualified retirement plan from the assets of a bankruptcy estate, I
    respectfully dissent from the opinion of the majority.
    With respect to statutory construction, the Sixth Circuit Court of Appeals has
    instructed:
    "We read statutes and regulations with an eye to their straight-
    forward and commonsense meanings." [Citation omitted.] We
    ascertain the plain meaning of a statute by reviewing "the
    particular statutory language at issue, as well as the language
    and design of the statute as a whole." [Citation omitted.]
    "When we can discern an unambiguous and plain meaning
    from the language of a statute, our task is at an end." [Citation
    omitted.]
    We may not, however, rely on the literal language of the
    statute where such reliance would lead to absurd results or an
    interpretation which is inconsistent with the intent of Congress.
    [Citations omitted.] Every word in the statute is presumed to
    have meaning, and we must give effect to all the words to
    avoid an interpretation which would render words superfluous
    or redundant.
    Walker v. Bain, 
    257 F.3d 660
    , 666-67 (6th Cir.2001). The majority’s reading is inconsistent
    with the clear intent of Congress that ERISA-qualified pension plans not be subject to
    creditor claims.
    Outside the bankruptcy law, I find no functional distinction between the protections
    afforded to beneficiaries of ERISA-qualified pension plans in which assets are held in trust
    and those in which assets are used to purchase annuity contracts. Outside of bankruptcy,
    no creditor of the Adams would be able to reach the debtors’ beneficial interests in their
    pension plans to satisfy claims, and this is true not because these interests are exempt
    from execution pursuant to state law, but because they are exempt from execution
    pursuant to federal law. See Guidry v. Sheet Metal Workers Nat. Pension Fund, 
    493 U.S. 365
    , 
    110 S. Ct. 680
     (1990)(permitting no equitable exception to ERISA’s anti-alienation
    provision). The filing of a bankruptcy case should not change this result.
    In Patterson v. Shumate, the Supreme Court held that “the antialienation provision
    required for ERISA qualification . . . constitutes an enforceable transfer restriction for
    purposes of § 541(c)(2)’s exclusion of property from the bankruptcy estate.” 504 U.S. at
    14
    759. Earlier in that opinion, the Court pointed out that “[t]he natural reading of the provision
    [§ 541(c)(2)] entitles a debtor to exclude from property of the estate any interest in a plan
    or trust that contains a transfer restriction enforceable under any relevant nonbankruptcy
    law.” Id. at 758. (emphasis added). While it is true that the specific issue before this Panel
    was not before the Court in Shumate, and thus that the reference to “the plan” may be
    merely dicta, I think that the reference actually illumines the Court’s understanding of the
    intent of Congress expressed both in ERISA and the Bankruptcy Code. The Court,
    recalling its previous refusal in Guidry to recognize any exceptions to ERISA’s anti-
    alienation provisions outside the bankruptcy context, asserted that its holding gave “full and
    appropriate effect to ERISA’s goal of protecting pension benefits,” and that it furthered the
    important policy underlying ERISA of uniform treatment of pension benefits. Id. at 764-65.
    Each of these considerations applies with respect to plans that are not required to hold
    certain assets in trust.
    The majority has advanced no policy considerations that support their more
    restrictive reading of section 541(c)(2). Instead their conclusion rests solely upon the literal
    requirement that a debtor’s beneficial interest be held “in a trust.” This emphasis on the
    asserted plain meaning of one section of the Bankruptcy Code fails to give proper
    deference to the unqualified prohibition on alienation found in ERISA. “Where there is no
    clear intention otherwise, a specific statute will not be controlled or nullified by a general
    one.” Morton v. Mancari, 
    417 U.S. 535
    , 550-51, 
    94 S. Ct. 2474
    , 2482-83 (1974) quoted
    in Guidry, 
    493 U.S. at 375
    . It is not section 541(c)(2) that excludes a debtor’s beneficial
    interest in an ERISA-qualified plan from the bankruptcy estate, but rather the anti-
    alienation provision itself which excludes it.
    The prior decision of the Sixth Circuit in Wilcox does not alter this conclusion. In
    that case, the court asserted that
    An inquiry under § 541(c)(2) normally has three parts: First,
    does the debtor have a beneficial interest in a trust? Second,
    is there a restriction on the transfer of that interest? Third, is
    the restriction enforceable under nonbankruptcy law?
    Wilcox v. General Retirement System of the City of Detroit (In re Wilcox), 
    233 F.3d 899
    ,
    904 (6th Cir. 2000). In that case, however, it was undisputed that the debtor’s interest in
    his retirement plan was a beneficial interest in a trust. Thus there was no specific
    discussion of the trust requirement, and certainly no statement that it included only
    “express trusts.” More importantly, the retirement plan under consideration in Wilcox was
    not an ERISA-qualified plan, and thus the court was not called upon to consider the
    15
    important policy considerations presented in this case where a federal statute restricts
    transfer of the Debtor’s interest.
    The majority relies heavily upon the decision of the bankruptcy court in Barnes to
    support its conclusion that only an interest in a trust can be the subject of an enforceable
    transfer restriction within the meaning of 11 U.S.C § 541(c)(2). See In re Barnes, 
    264 B.R. 415
     (Bankr. E.D. Mich. 2001). Significantly, while that decision requires the presence of
    a “trust” before a beneficial interest is excluded from a bankruptcy estate, the contract
    found to be a trust is virtually indistinguishable from the contracts in the present case.
    Rather than following the three-step analysis announced in Wilcox, the court focused solely
    upon the “sine qua non” of a trust: the division of legal title from equitable interest. See
    Barnes, 
    264 B.R. at 432
    . The court concluded that a variable annuity contract may be a
    trust for purposes of § 541(c)(2). I find this result disingenuous, and much prefer a
    straightforward holding that § 541(c)(2) does not require the existence of an express trust
    to exclude an ERISA-qualified plan from a bankruptcy estate.
    It is important to emphasize that Shumate did not exclude a debtor’s interest in an
    ERISA-qualified pension plan from the bankruptcy estate under § 541(c)(2) because that
    interest looks something like an interest in a spendthrift trust. ERISA-qualified pension
    plans do not look anything like spendthrift trusts. They may be self-settled and they permit
    the voluntary invasion of corpus under certain specified conditions. The rationale
    advanced for excluding spendthrift trusts from the estate, that the filing of a bankruptcy
    case should not be cause for frustrating the expectations of the settlor of the trust, is not
    present with respect to ERISA-qualified pension plans. See H.Rep. No. 95-595, 95th
    Cong., 1st Sess. 176 (1977), U.S.Code & Admin.News 1978 pp. 5963, 6136. Rather,
    completely different policy considerations are at work in the case of ERISA-qualified
    pension plans. The goal of ERISA is to protect and preserve pension benefits for
    pensioners and their dependents.
    In announcing its decision in Guidry, the Court emphasized this policy:
    Section 206(d) [
    29 U.S.C. § 1056
    ] reflects a considered
    congressional policy choice, a decision to safeguard a stream
    of income for pensioners (and their dependents, who may be,
    and perhaps usually are blameless), even if that decision
    prevents others from securing relief for the wrongs done them.
    Guidry, 
    493 U.S. at 365
    . Likewise in Shumate, the Court characterized its holding as giving
    “full and appropriate effect to ERISA’s goal of protecting pension benefits.” Shumate, 504
    16
    U.S. at 764. Further, the court indicated that its decision would ensure that “the treatment
    of pension benefits will not vary based upon the beneficiary’s bankruptcy status.” Id.
    The narrow reading of § 541(c)(2) advanced by the majority of the Panel nullifies the
    anti-alienation provision of ERISA for non-trust, qualified pension plans. The majority
    advances no policy argument in favor of this reading. Were we called upon simply to
    construe § 541(c)(2), without the benefit of the Supreme Court’s opinions in Guidry and
    Shumate, then a narrow, “plain-meaning” reading would be appropriate, but I believe that
    we must go beyond § 541(c)(2) and include within our discussion the plain meaning of
    ERISA’s anti-alienation requirement. When this is done, it is clear that ERISA-qualified
    pension plans, whether held in trust or not held in trust, are excluded from the bankruptcy
    estate.
    17