Is There Zakât on Retirement Funds (401K, etc.)?
Typically, pension funds such as 401K’s are managed as follows: An employee makes optional contributions to his pension fund. The contributions are deducted from his salary checks. Employers usually contribute to the employee’s 401K fund by matching a certain percentage of the contribution made by the employee. This fund grows by contribution and investment and is returned to the employee when he or she reaches retirement age. Until the time of retirement, the fund is managed by an independent agency. The employee cannot use the fund or any part of it at will, since the fund is not supposed to be withdrawn until the time of retirement. However, if the employee must withdraw the money, then that initiates certain procedures. When the money is withdrawn, both tax and penalty are imposed on the amount taken and the employee receives the remaining amount. According to Shaykh Qardawi, if the contributor has access to the fund and can spend it at will, then Zakât is due every year on the fun
