Answered by: Imam Abdul-Malik Sheikh
Question
Asalaamu Alaikum. Quick question – I know I asked before but need to confirm:: IRA/retirement accounts that you don’t have access to until you reach a specific age- need to be counted towards zakat or not?
بِسْمِ اللهِ الرَّحْمنِ الرَّحِيْم
In the name of Allah, the Most Gracious, the Most Merciful
Answer:
Zakat becomes obligatory when the following conditions are met in a person:
1- Being in a state of Islam
2- Maturity (not obligatory on children)
3- Sanity
4- Possession of Nisāb
5- And the Nisāb being in one’s Poseidon for a full lunar year
In addition to the above, the following conditions need to be met with regards to the wealth:
1 – Ownership. Zakat is not obligatory on wealth on does not own
2- Ability to use the wealth
3- Growth
4- Excess over basic needs
My understanding is that the IRA is a type of investment plan in which there is growth and a person with such a plan has legal ownership of the saving even though he is unable to withdraw the money before a certain time without incurring a financial penalty. Therefore, Zakat will be due every year as long as the total amount meets the Nisab threshold.
Reference:
Bada’i al-Sana’i, Vol.2 p.10, Dar al-Kutub al-Ilmiyyah
Only Allah knows best
Written by Imam Abdul-Malik Sheikh
Checked and approved by Mufti Mohammed Tosir Miah
Darul Ifta Birmingham