UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF ALASKA

        This adversary action represents an effort by chapter 7 debtors to avoid federal tax liens on a 401(k) savings and investment plan and a pension plan. Summary judgment for the United States is appropriate.

Jurisdiction

        While the trustee was added as a party defendant, he has since withdrawn his objections to the debtors' exemptions and filed a report of no distribution in the main case. The estate now claims no interest in the disputed plans. Even though the trustee is not a party, I find this matter to be a core proceeding under 28     2 ABR 194  U.S.C. § 157(b)(2)(I), (K) and (O). In re Miranda, 2 A.B.R. 122 (Bankr. D. Alaska 1991).

Facts

        The facts of this case are not in dispute. The debtor David Raihl is a 55 year old employee of Alyeska Pipeline Company. During his 25 years of service with the company, Raihl has accumulated approximately $99,767.00 in a 401(k) savings and investment plan and also has valuable pension rights. Pre-petition federal tax liens total approximately $112,593.00. ⁽¹⁾ The Raihls filed a chapter 7 bankruptcy on August 9, 1990 and this action ensued.

Analysis

        26 U.S.C. § 6321 creates a lien for unpaid taxes in favor of the United States upon "all property and rights to property" of the debtor. This broad language "reveals on its face that Congress meant to reach every interest in property that a taxpayer might have." United States v. National Bank of Commerce, 472 U.S. 713,719-720 (1985)

        The plaintiff David Raihl has vested rights in his Alyeska 401(k) savings and investment plan. He is entitled to withdraw those funds upon termination of employment either voluntarily or involuntarily. He has a right to a "hardship withdrawal deduction". Under that deduction, funds can be withdrawn to purchase a home, pay medical expenses, pay college expenses or for other reasons. Plaintiff David Raihl has a right to withdraw 401(k) funds after retirement without hardship. Similarly, David Raihl. has rights to payments under the Alyeska pension plan. He has the current right to take early retirement and receive retirement payments. Should he die, his spouse has a right to the same pension benefits. The pension plan has an anti-assignment provision. The 401(k) plan has a trustee.

        The debtors contend their interest in the plans do not constitute "property" or "rights to property" to which a federal tax lien applies.

        The debtors rely primarily on Little v. United States, 704 F.2d 1100, 1106 (9th Cir. 1983) as authority. I do not find Little persuasive in this case for a number of reasons. First of all, Little held that a federal tax lien attached to redemptive rights in real property. Little is consistent with the broad application of federal tax liens to all interests in property. Little did not involve pensions or 401(k) plans. The court applied tests of pecuniary worth and alienability to determine if     2 ABR 196  redemptive rights constituted property under California law. The two part test of Little does not represent the exclusive method of determining whether property or rights to property exist. It simply represents the test developed in California to determine the nature of property rights.

        In analyzing the attachment of federal tax liens, this court must first determine if the debtor possesses property or rights to property arising under Alaska law. Aquilino v. United States, 363 U.S. 509, 512-513 (1960). In Alaska, property is defined by statute and no reference to the Little tests are necessary. Under A.S. 01.10.060(10) property includes real and personal property. "Personal property" is defined in A.S. 01.10.060(9) to include money, goods, chattels, things in action and evidences of debt. The debtor David Raihl has a right to $99,767.00 from his 401(k) plan for hardship, upon retirement or simply quitting. He also has a right to substantial pension payments immediately should he elect an early retirement. Under these circumstances, and in accordance with Alaska law, David Raihls rights to money constitute rights to property which are subject to federal tax liens. The fact that his rights may come about through his status as a beneficiary of a spendthrift trust does not defeat the lien upon his interests. In re Anderson, 2 A.B.R. 82 (Bankr. D. Alaska 1991).

        Plaintiffs appear to have abandoned their stripdown arguments under 11 U.S.C. § 506(d). In accordance with In re Miranda, supra, I find there can be no stripdown of a federal tax lien. I have reviewed the remaining arguments of the plaintiffs and find them without merit.

        Therefore, IT IS HEREBY ORDERED:

        1.    Count One of plaintiffs' complaint shall be dismissed without prejudice;

        2.    Plaintiffs' motion for summary judgment is denied;

        3.    The cross-motion of defendant United States for summary judgment is granted;

        4.   Plaintiffs' complaint as to the defendant trustee William Barstow is dismissed without prejudice;

        5.    William Barstow's cross-claim against the United States is dismissed without prejudice; and

        6.    Each party shall pay their own costs and attorney's fees.

        Judgment shall be entered and docketed accordingly.

     DATED: November 19, 1991.

BY THE COURT




DONALD MacDONALD IV
United States Bankruptcy Judge

N O T E S:

1. The precise amount of taxes owing on the petition date and possibly secured were not set forth in the facts of either party. $112,593.00 was revealed to the court through judicial notice of the debtors' schedules. According to the parties, a tax lien of $76,455.00 was filed May 18, 1989 and "sometime prior to December 25, 1989" an additional assessment was made. The amount of that assessment as of the petition date is not revealed through the parties' factual statements.