Mufti Online — Madrasah Ta'leemuddeen

Zakaat on retirement fund

· 14 Shawwal 1435 AH1 min readEnglish

Question

I have a retirement fund called 401K where I contribute certain amount of money every bi-week and the employer matches certain percentage. I can withdraw the money if I wish but before the age of 59 and half if the money is withdrawn there is a penalty and tax burden involved. The question is whether I have to pay zakaah on the this and if I have to what would be the correct way to do this?

Answer

You will pay zakaat in proportion to your contributions.

And Allah Ta'ala (الله تعالى) knows best.

References (Arabic / Urdu sources)

وشرط افتراضها عقل وبلوغ وإسلام وحرية … وسببه أي سبب افتراضها ملك نصاب حولى نسبة للحول لحولانه عليه، قال الشامي تحت قوله نسبة للحول: أي الحول القمري لا الشمس اهـ (الدر المختار 2/258)

Answered by
Mufti Ebrahim Salejee (Isipingo Beach)
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Source: Mufti Online — Madrasah Ta'leemuddeen — https://muftionline.co.za/node/7272
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Is zakaat payable on pension, provident fund or retirement annuity?

“We've previously answered an inquiry regarding Zakat on voluntary retirement savings plans where the employer also contributes. For details, kindly see Ask Imam #29670.”

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