- EN (English)
| Fatwa ID: | 85746 |
| Title: | Paying zakat on my employee retirement fund |
| Category: | Poor-due or obligatory charity (Zakaah) |
| Scholar: | Dr. Main Khalid Al-Qudah |
| Date: | 10/24/2011 |
As salamu alaykum I work for a public school system where teacher retirement is mandatory and not an option. Money is withdrawn out of my bi-weekly check for this. I am not sure if I should pay zakat on this money because their stocks and other investments may not be halal. What is the ruling on this? JazakAllah Khair
Alhamdu Lillah
For any pension plan, 401(K) or the like, you need to pay Zakah annually on the withdrawable amount after deducting all prescribed penalties and taxes and administrative fees. It is to be noted that you do not have to actually withdraw the money to be Zakatable, rather it is enough for the money to be withdrawable (even with penalty) to be subject to Zakah.
As of investing in your 401(K), you need to select the category you want to invest in. It is your right to discuss with your investment company the options you have. Any of the (socially responsible) mutual funds can help you with choosing the right category and what kind of investment you should go with.
