Dear Sir,

Assalamo Alaikum

What is the ruling of Zakat on 401(k) Retirement Fund?

Z. Khan

 

Br. Z. Khan, Walekum Assalam WRWB

May Allah accept your zakat, Amen!

Answer

Your contribution to 401(k) is your saving; hence, it is liable for zakat. You have to include the amount you contribute to the fund in your total wealth to pay zakat every year. However, you may defer the payment till you get the total fund, but then you have to calculate zakat of all the intervening years and pay it in lump sum. As regards your company’s contribution, you have to pay zakat only once, when you receive it.

Allah knows best