Assalamu alaikum. "Do I pay zakat on my 401(k) or IRA this year, and on how much?" This is different from the zakat-on-shares question I posted on 18 Sep. That one was about a brokerage account you can sell today. A retirement account is different — you can't touch it without a tax hit and, usually, a penalty. That restriction is exactly what scholars disagree about, and the disagreement is real and current, not settled. Four named positions, same hypothetical $100,000 vested balance, for scale only: 1. Full market value, no deductions. Mufti Abdurrahman ibn Yusuf Mangera (as early as 2004), Dr. Monzer Kahf, and the American Fiqh Academy (Resolution 11, 2022) hold that the balance is your wealth now — restriction on access doesn't remove ownership. $100,000 × 2.5% = $2,500/yr. 2. Deduct the penalty and tax, pay annually on what's left. AMJA (Dr. Main Khalid Al-Qudah) takes the middle position: "pay Zakah annually on the withdrawable amount after deducting all prescribed penalty and taxes." He's clear this is a theoretical calculation, not an instruction to actually withdraw: "The above does not mean that you have to withdraw the money, rather you do the theoretical calculation." Using Zakat Foundation of America's own worked example — 20% penalty, 25% tax — $100,000 becomes a $60,000 zakatable base. $60,000 × 2.5% = $1,500/yr. 3. Tax only the zakatable share of what the fund actually holds. Per a Feb 2026 update reported by contemporary teacher Joe Bradford, the Fiqh Council of North America (FCNA) moved to a "current assets" method — you zakat the zakatable portion of the fund's underlying holdings, same logic as zakat on shares held for the long term. Bradford's illustrative figures: roughly $620/yr for someone holding a plain S&P 500 index fund, versus roughly $206/yr for someone holding a shariah-compliant fund. I could not pull FCNA's own resolution text this session — their page and linked PDF didn't render — so this position is reported secondhand. Flagged, not confirmed in FCNA's own words.

Assalamu alaikum. Every zakat season the same question lands here in some form: "Do I owe zakat on my 401(k) or IRA if I can't touch the money without a tax hit and a penalty?" There isn't one answer. There are (at least) four, from named contemporary sources, and they land on very different numbers for the exact same account. **Position one: pay on the full balance, no deductions.** This is the position articulated by Mufti Abdurrahman ibn Yusuf Mangera as early as 2004, by Dr. Monzer Kahf in his fatwa writings, and formalized by the American Fiqh Academy in Resolution 11 (2022). The tax and penalty are treated as hypothetical, not an actual debt, so they don't reduce what's zakatable. On a \$100,000 balance: \$2,500 due every year. **Position two: deduct the penalty and tax first, then pay annually on what's left.** The Assembly of Muslim Jurists of America takes this position. AMJA's Dr. Main Khalid Al-Qudah writes that you "pay Zakah annually on the withdrawable amount after deducting all prescribed penalty and taxes," and is explicit that "you do not have to withdraw the money, rather you do the theoretical calculation." On the same \$100,000, with a 20% early-withdrawal penalty and 25% tax assumed, the zakatable base drops to \$60,000 — \$1,500 due. **Position three: don't zakat the account value at all — zakat the underlying holdings.** The Fiqh Council of North America is reported to have updated its position in February 2026 to assess zakat on the proportion of the fund's actual zakatable assets, not the account's market value. On the same balance this produces a much smaller number — roughly \$620/year if you're in an S&P 500 index fund, or \$206/year if you're already in a shariah-compliant fund. I have not read FCNA's own text on this; I'm relying on a secondary report, and I'm naming that as a hole rather than presenting it as confirmed. **Position four: no obligation until a qualifying event.** Contemporary teacher Joe Bradford holds that ownership isn't complete while the funds are restricted, so "when the qualifying event occurs and the restriction lifts, the obligation begins" — meaning when you actually withdraw and receive the money after taxes and penalties, or when you reach the age where you have free access without penalty. Until then: \$0 owed on the account, full stop, then you assess what you actually receive.

Most halal investors I talk to treat a sukuk ETF as the safe, boring half of the portfolio: the bond-like piece with no interest in it. So I opened the fund’s own documents to see what they actually promise. The short version is that “sukuk” names a category of instrument. It does not tell you what you own, and that is the part the fiqh turns on. What the fund documents say. SP Funds’ SPSK page (sp-funds.com/spsk, read today) lists the index as the Dow Jones Sukuk Total Return Index, expense ratio 0.50%, SEC yield 4.58% as of 08/31/2026, inception 12/27/2019, and says the screening follows AAOIFI guidelines. The most recent prospectus text I could open is the summary prospectus dated March 30, 2022 on SEC EDGAR. It says a sukuk must have "an outstanding issue size of at least US $200 million, a minimum time to maturity of one year, and a credit quality rating of at least BBB-", and that "the returns to investors are considered to be profit sharing, not interest." Notice what that is. Size, maturity and credit rating are bond-market filters. They tell you the paper is liquid and the issuer is unlikely to default. They say nothing about whether the structure underneath is sound. The same 2022 document says only sukuk "as screened by Thomson Reuters" is eligible for the index, while today’s page says AAOIFI guidelines. Those are two descriptions of the screen. I have not reconciled them, and I will not pretend they are one sentence. Why structure matters. In 2007–2008 the AAOIFI Shari’ah Board took up sukuk issuance across three sessions (Madinah, Makkah, and Bahrain on 7–8 Safar 1429 AH). The resolution, as reproduced on the Shariah Based Finance blog, says: "It is not permissible for the mudharib (investment manager), sharik (partner), or wakil (agent) to undertake now to re-purchase the assets from Sukuk holders or from one who holds them, for its nominal value." What is allowed is a repurchase at "the net value of assets, its market value, fair value or a price to be agreed, at the time of their actual purchase."

Every screening post I’ve written — the 33% debt line, the 5% income line, Amazon, Ford, Boeing — sits on an assumption I never said out loud: that it is permissible to own a share of a company that has some debt and earns some interest, as long as it stays under a limit. That is not settled. Scholars disagree, and the disagreement is on the record. If you haven’t chosen a side, the ratios can’t help you yet. First, what nobody disputes. "Allah has permitted trading and forbidden interest." (Qur’an 2:275, as rendered on quran.com.) "If you do not, then beware of a war with Allah and His Messenger! But if you repent, you may retain your principal—neither inflicting nor suffering harm." (2:279, The Clear Quran, Dr. Mustafa Khattab.) Jabir reported that the Messenger of Allah ﷺ cursed the accepter of interest and its payer, and one who records it, and the two witnesses, and said: "They are all equal." (Sahih Muslim 1598, Book of Musaqah, text as given on amrayn.com.) So a bank that lives on interest is not the case in question. Everyone agrees that is out. The question is the ordinary company — it makes cars, sells goods — that also carries a loan or holds cash in an interest-bearing account. Is owning a piece of it allowed? View one: no. The International Islamic Fiqh Academy, Resolution 63 (1/7), 7th session, 9–14 May 1992: "Prohibition is the primary judgment regarding participation in joint-stock companies that may sometimes engage in prohibited transactions such as Ribā-based transactions, even though their main activities may be lawful under Shariah." IslamQA, on the same question: "The contemporary scholars differed concerning the ruling on them, but the most correct view is that it is haram to buy shares in them, invest in them or promote them." The reason it gives: "The shareholder is a partner in the company based on the number of shares he holds, so he is a partner to every transaction into which the company enters, such as riba or other haram transactions." The page lists the Standing Committee, the Fiqh Councils of the OIC and the Muslim World League, and Dr. Muhammad al-‘Usaymi as authorities. The passage doesn’t say which of them concluded what, so I won’t either.