- Do I need to pay Zakat on the money that is invested in 401K plan every year? My contributions and the employer contributions, are both needs to be accounted for Zakat or just my contributions? I am investing my 401 k amounts only in the Amanah Trust fund which is supposed to be the shariah compliant. Please advise.
- How do one calculated zakat on the amounts in the Bank accounts? Does the money has to stay in the possession for a year for it to become zakatabale. I generally check my account (checking account which I use as my Savings account) balance from last year (1st of Ramadan) and 1st of Ramadan of the year in which I am paying the zakat. I take the difference and pay the zakat on the money that has been in my possession for a year and then pay the zakat on that amount. Is that correct
Thank you for your time.
JazakAllah Ho Khairan.
الجواب وبالله التوفيق
1- It is mandatory for you to pay Zakat on the money saved in your 401K. This Zakat will be paid only on the money you are contributing towards the total. The Zakat on the rest of the money contributed by your employer will be paid once that portion is in your actual possession.
2- The Zakat will be paid on all the money, the condition for elapsing one whole year is only for the very first time one is becoming liable to discharge their Zakat. Once the whole year elapsed and Zakat became mandatory on you, you will have to include the rest of the money as well to pay Zakat on the total. The method you have adopted to calculate Zakat is incorrect.
واللہ اعلم بالصواب