At issue in this case is whether Plaintiff-appellee Donald Dean Walker's (Debtor) individual retirement annuities (IRA's) and Keogh annuities should be included as property of his bankruptcy estate, and, if included, whether the annuities are subject to exemption from the estate pursuant to the relevant Oklahoma exemption statutes.1 Under the Bankruptcy Code, virtually all property in which a debtor has a legal or equitable interest at the commencement of the case is included in the bankruptcy estate, see 11 U.S.C. § 541, but a debtor may exempt certain property from the estate, see id. § 522. The Code includes a list of properties which may be exempted, see id. § 522(d), and it allows states to establish separate exemption lists. A debtor may choose either the federal exemption provisions or the state provisions unless he resides in a state that has "opted out" of the federal exemption list. See id. § 522(b)(1); 3 Collier on Bankruptcy p 522.02, (15th ed. 1991). In states that have "opted out," debtors are limited to the state exemption list. The relevant state in this case, Oklahoma, has "opted out." See Okla.Stat.Ann. tit. 31, § 1B (West 1991). Oklahoma bankrupt debtors therefore are limited to the Oklahoma exemptions. See id. § 1A (exemptions).

Debtor filed for Chapter 7 bankruptcy protection and claimed two IRA's and a Keogh as exempt from the bankruptcy estate pursuant to Okla.Stat.Ann. tit. 31, § 1A(20). The Oklahoma statute allows debtors to exempt both IRA's and Keoghs provided the investments fully qualify for tax deferral treatment under the Internal Revenue Code. Id. The Defendant-appellant Trustee challenged the exemptions, contending that the Oklahoma statute was invalid. In a core proceeding resulting in a published final order, the bankruptcy court ruled in favor of Trustee. See In re Walker, 108 B.R. 769 (Bankr.N.D.Okla.1989). Specifically, the court held that the annuities were property of the estate pursuant to § 541 and were not subject to exemption under § 522 because the Oklahoma exemption statute was an unconstitutional impairment of contracts. U.S. Const. art. I, § 10, cl. 1. On appeal, the district court also held that the annuities were part of the estate pursuant to § 541; however, it reversed the bankruptcy court order, holding that the Oklahoma exemption statute did not violate the Contracts Clause.

Trustee appeals from the district court judgment. He contends that the Oklahoma exemption statute is invalid because (1) it is an unconstitutional impairment of contracts, (2) it is preempted by the Employee Retirement Income Security Act of 1974 (ERISA), and (3) it exceeds the scope of authority delegated to the States pursuant to § 522 of the Bankruptcy Code to establish bankruptcy exemptions. In the alternative, Trustee argues that Debtor did not meet his burden of proving that the annuities in question were not overfunded and therefore fully tax exempt. The Trustee did not raise this alternative argument below, and he has not attempted to articulate a reason for us to depart from the general rule that "a federal appellate court does not consider an issue not passed upon below." Singleton v. Wulff, 428 U.S. 106, 120, 96 S. Ct. 2868, 2877, 49 L. Ed. 2d 826 (1976). See also Pell v. Azar Nut Company, Inc., 711 F.2d 949, 950-51 (10th Cir.1983). Therefore, we decline to consider the argument. We have jurisdiction to address the remaining issues on appeal pursuant to 28 U.S.C. § 1291 and 28 U.S.C. § 158(d). Upon exercising de novo review of the remaining legal issues, see First Bank v. Mullet (In re Mullet), 817 F.2d 677, 679 (10th Cir.1987), we affirm.

I. The Annuities.

The bankruptcy court made specific findings regarding the annuities in this case. See 108 B.R. at 770-772. In sum, the court found as follows: the total cash surrender value of the three annuities was $137,699.48 as of June 30, 1988; the IRA's were funded fully by the debtor; the Keogh was funded fully by a business which the debtor formerly owned and operated; all annuities qualified for tax deferral treatment under the Internal Revenue Code; and finally, the annuities were not subject to ERISA regulations.2 These findings were accepted implicitly by the district court, see In re Walker, 139 B.R. 31 (N.D.Okla.1990), and they are not challenged here.

II. Bankruptcy Estate Property.

Before reaching the Oklahoma exemption issues, we must determine whether the annuities in this case should be included in the bankruptcy estate pursuant to 11 U.S.C. § 541. As stated above, § 541 encompasses virtually all property in which a debtor has a legal or equitable interest as of the time of the bankruptcy petition. Even properties with underlying agreements which contain restrictions on transfer are included. See id. § 541(c)(1)(A). Nevertheless, § 541 contains an exception for "a restriction on the transfer of a beneficial interest of the debtor in a trust that is enforceable under applicable nonbankruptcy law...." Id. § 541(c)(2).3 Such anti-alienability provisions remain enforceable under the statute; therefore, a debtor's interest in the trusts does not enter the bankruptcy estate.

The circuits are split over the scope of § 541(c)(2)'s exception for anti-alienability provisions that are enforceable under "applicable nonbankruptcy law." Four circuits have held that the provision refers exclusively to state spendthrift trust law. See Daniel v. Security Pacific National Bank (In re Daniel), 771 F.2d 1352, 1360 (9th Cir.1985), cert. denied, 475 U.S. 1016, 106 S. Ct. 1199, 89 L. Ed. 2d 313 (1986); Lichstrahl v. Bankers Trust (In re Lichstrahl), 750 F.2d 1488, 1490 (11th Cir.1985); Samore v. Graham (In re Graham), 726 F.2d 1268, 1273-74 (8th Cir.1984); Goff v. Taylor (In re Goff), 706 F.2d 574 (5th Cir.1983). We recently rejected the reasoning of the above courts, however, and joined three other circuits in holding that "applicable nonbankruptcy law" is not limited to state spendthrift trust law. See Gladwell v. Harline (In re Harline), 950 F.2d 669 (10th Cir.1991). See also Velis v. Kardanis, 949 F.2d 78, 81-82 (3d Cir.1991); Forbes v. Lucas (In re Lucas), 924 F.2d 597, 601 (6th Cir.), cert. denied, --- U.S. ----, 111 S. Ct. 2275, 114 L. Ed. 2d 726 (1991); Anderson v. Raine (In re Moore), 907 F.2d 1476, 1477 (4th Cir.1990). Instead, we indicated that "[t]he phrase on its face is clear and broad" and could encompass federal ERISA anti-alienability provisions as well as state provisions aside from spendthrift trust law. Gladwell, 950 F.2d at 674.

Debtor seizes on the § 541(c)(2) exception as an alternative ground for affirmance, contending that his annuities should be excluded from the bankruptcy estate because they are enforceable spendthrift trusts under Oklahoma law. See Okla.Stat.Ann. tit. 60, § 175.25 (West 1971). In support of this proposition, he cites Greening Donald Co. v. Oklahoma Wire Rope Products, Inc., 766 P.2d 970 (Okla.1989). Greening Donald, however, did not involve spendthrift trust law. On the contrary, the court in that case held that IRA's cannot be enforceable spendthrift trusts under Oklahoma law. Id. at 973. But this does not end the inquiry given our holding that the § 541(c)(2) exclusion is not limited to spendthrift trust law.

Greening Donald turned on the court's interpretation of Okla.Stat.Ann. tit. 60, §§ 326-28 (West 1971), which provides that retirement trusts are exempt from state garnishment proceedings provided they meet certain criteria.4 Specifically, the court applied the statute to an Individual Retirement Account, holding that the Account was exempt from garnishment because it qualified for tax deferral treatment under the Internal Revenue Code and contained an anti-alienability clause. See Greening Donald, 766 P.2d at 972-73. Debtor's argument rests on a superficial similarity between his annuities and the Greening Donald account. That is, all the instruments fall into the category of tax deferred investments loosely described as IRA's and Keoghs; however, debtor's instruments do not contain anti-alienability provisions. Whereas the Individual Retirement Account in Greening Donald expressly prohibited alienation, the Individual Retirement Annuities and Keoghs in this case expressly allow written assignment. See I R. exh. 1 at 14, exh. 2 at 16 and exh. 3 at 14. Clearly, debtor's annuities do not contain anti-alienability clauses enforceable under any "applicable nonbankruptcy law." Therefore, the bankruptcy court correctly included the annuities in the estate.

III. Exempt Property.

Debtor's IRA's and Keogh undisputedly fit within the Oklahoma exemption statute. See Okla.Stat.Ann. tit. 31, § 1A(20) (West 1991).5 Therefore, barring some legal deficiency in the application of or on the face of the statute, the IRA's and Keoghs should be exempted from the bankruptcy estate pursuant to 11 U.S.C. § 522. Trustee urges us to reinstate the bankruptcy court's holding that the Oklahoma exemption statute as applied is unconstitutional because it impairs the creditors' ability to collect on their contracts, all of which were entered before the effective date of the statute. See U.S. Const. Art. I, § 10, cl. 4, ("No State shall ... pass any ... Law impairing the Obligation of Contracts....").

Recognizing that the Contracts Clause "prohibition must be accommodated to the inherent police power of the State 'to safeguard the vital interests of its people,' " the Supreme Court has crafted a three-part test to determine whether retroactive state legislation that affects contracts is unconstitutional. See Energy Reserves Group, Inc. v. Kansas Power & Light Co., 459 U.S. 400, 410, 103 S. Ct. 697, 704, 74 L. Ed. 2d 569 (1983) (quoting Home Bldg. & Loan Assn. v. Blaisdell, 290 U.S. 398, 434, 54 S. Ct. 231, 239, 78 L. Ed. 413 (1934)). "The threshold inquiry is 'whether the state law has, in fact, operated as a substantial impairment of a contractual relationship.' " Id. at 411, 103 S.Ct. at 704 (quoting Allied Structural Steel Co. v. Spannaus, 438 U.S. 234, 244, 98 S. Ct. 2716, 2722, 57 L. Ed. 2d 727 (1978)). If this threshold is met, the law violates the Contracts Clause unless (1) it is supported by a "significant and legitimate public purpose," id., and (2) "the adjustment of 'the rights and responsibilities of contracting parties [is based] upon reasonable conditions and [is] of a character appropriate to the public purpose justifying [the legislation's] adoption,' " id. at 412, 103 S.Ct. at 705 (quoting United States Trust Co. v. New Jersey, 431 U.S. 1, 22, 97 S. Ct. 1505, 1517, 52 L. Ed. 2d 92 (1977)).

We need not address whether the Oklahoma statute represents a "substantial impairment," for we are confident that any such impairment is a justifiable exercise of Oklahoma's inherent police power. The district court correctly identified a "significant and legitimate" public purpose--the provision for bankrupt debtor families' needs. See In re Walker, 139 B.R. at 33 (N.D.Okla.1990) (citing Anderson v. Canaday, 37 Okl. 171, 131 P. 697, 698 (1913)). The Trustee does not attempt to argue that protection of the family is not a significant and legitimate state interest. Instead, he rests on the analysis of the bankruptcy court, which took issue only with the scope of the exemption statute. In re Walker, 108 B.R. 769 at 775 (adopting analysis of In re Garrison, 108 B.R. 760 (Bankr.N.D.Okla.1989), an opinion issued the same day by the same bankruptcy judge). In In re Garrison, the court held that the scope of this exemption was inappropriate to the legitimate public purpose of providing for bankrupt families:

Here is no example of legislation at its fairest; here is no sign of intensive study of the consequences of what has been done, nor safeguarding the future on the basis of responsible forecasts.... Here is a sweeping, heedless delegation, to a foreign Congress occupied with different concerns, of unqualified power to destroy a venerable and well-founded tradition guarding against abuse of spendthrift trusts, the practical consequence being that the United States Congress, in tinkering with its own tax laws, unknowingly grants a license to defraud creditors to citizens of the State of Oklahoma. These are not reasonable conditions, of a character appropriate to a legitimate purpose....

In re Garrison, 108 B.R. at 768 (citations omitted).

The bankruptcy court's concern for the thoughtless "tinkering" of a "foreign Congress" seems peculiar when considering that Oklahoma's authority to legislate bankruptcy exemptions flows from that very congress. See 11 U.S.C. § 522(b)(1). Even so, the court correctly asserted that the Oklahoma exemption statute may not be an "example of legislation at its fairest," but "legislation at its fairest" is not a realistic goal. Legislatures must balance competing interests before passing any statute, and it is not our function as federal courts to second guess the resulting choice. On the contrary, "[u]nless the State itself is a contracting party, ... '[a]s is customary in reviewing economic and social regulation, ... courts properly defer to legislative judgment as to the necessity and reasonableness of a particular measure." Energy Reserves, 459 U.S. at 412-13, 103 S.Ct. at 705 (quoting United States Trust Co., 431 U.S. at 22-23, 97 S.Ct. at 1517-18).

Affording appropriate deference to the policy choice of the Oklahoma legislature, we agree with the district court that no reason exists to declare the exemption statute an unconstitutional impairment of contract. The bankruptcy court focused on the bank-account-like quality of some qualifying IRA's, stating that a debtor can use the accounts "as he pleases but creditors cannot reach [the accounts] at all." In re Garrison, 108 B.R. at 768. This does not give adequate weight to the determination by the Oklahoma legislature that substantial early withdrawal penalities and the Uniform Fraudulent Transfer Act, 24 Okla.Stat.Ann. §§ 112-123 (West 1987 & Supp.1992), are adequate to curb debtor abuse of IRA's. The court mentioned these factors, but discounted them as inadequate protection for creditor interests. In re Garrison, 108 B.R. at 768. We cannot agree with this analysis; although the factors may not provide protection of the degree desired by the bankruptcy court, we cannot substitute our judgment for that of the Oklahoma legislature. The exemption statute represents a rational policy choice in favor of debtor retirement funds, whether they be traditional spendthrift type instruments or IRA's and Keoghs. We cannot upset this choice.

Trustee next argues that ERISA preempts the exemption statute even though Debtor's annuities are not subject to ERISA regulation. This supposedly is because the non-ERISA portion of the exemption statute is not severable under state law from the "[u]nquestionably" preempted ERISA portion pursuant to the Supreme Court's holding in Mackey v. Lanier Collection Agency & Service, Inc., 486 U.S. 825, 108 S. Ct. 2182, 100 L. Ed. 2d 836 (1988). Trustee's Brief at 16. Preemption of the latter portion of the statute, however, is not "unquestionable." The Mackey Court certainly emphasized the breadth of ERISA preemption, but circuit courts that have since addressed state exemption statutes similar to Oklahoma's are split over the issue of whether the statutes are preempted. See, e.g., Pitrat v. Garlikov, 947 F.2d 419 (9th Cir.1991) (preemption, but strong dissent); Heitkamp v. Dyke (Matter of Dyke), 943 F.2d 1435 (5th Cir.1991) (no preemption).

We will not decide the ERISA preemption issue until it is squarely before us. Without the benefit of briefing from parties who are litigating ERISA plan exemptions, it would be inappropriate in this case for us to declare unconstitutional the ERISA portion of the statute, and then extend that holding via a severability analysis to the relevant portion of the statute. In any event, the ERISA portion of the Oklahoma exemption statute is superfluous in the bankruptcy context--we have already held that ERISA plans may be excluded altogether from the estate pursuant to 11 U.S.C. § 541(c)(2).6 See In re Harline, 950 F.2d 669.

Trustee's final argument is equally meritless. Pursuant to Congress' authority to establish uniform bankruptcy laws, see U.S. Const. art. I, § 8, cl. 4, it may delegate to the States the authority to legislate bankruptcy exemptions. See Stellwagen v. Clum, 245 U.S. 605, 38 S. Ct. 215, 62 L. Ed. 507 (1918); Hanover National Bank v. Moyses, 186 U.S. 181, 22 S. Ct. 857, 46 L. Ed. 1113 (1902). Trustee argues that the Oklahoma exemption statute exceeds the scope of this authority, but he cites no persuasive authority from case law or from the structure or legislative history of the current Bankruptcy Act. Congress intended to provide a "fresh start, but not instant affluence" for bankrupt debtors. See S.Rep. 989, 95th Cong.2d Sess. 6 (1978), reprinted in 1978 U.S.C.C.A.N. 5787, 5792. However, Congress certainly was aware of the "wide disparity in the type and amount of exemptions allowed by the various states," 3 Collier on Bankruptcy, § 522.22 (15th ed. 1991), and by delegating to the states the option to legislate bankruptcy exemptions Congress implicitly acknowledged the disparity. The Oklahoma exemption statute is not inconsistent with the alternate federal list in 11 U.S.C. § 522; it simply is more favorable to debtors.

We AFFIRM the district court judgment and remand for further proceedings consistent with this opinion.