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Madinat al-Muslimeen Islamic Message Board
| Re: Teachers' Retirement Fund: Halal or not? |
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| BrKhalid |
| 10/01/02 at 11:04:40 |
| Asalaamu Alaikum ;-) I can't say I know the answer but one question I had was: Is the refund the same amount as the earnings which was deducted in the first place? Or have they invested the money and it turns out that the refund may actually be more? |
| Re: Teachers' Retirement Fund: Halal or not? |
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| ibnasabil |
| 10/01/02 at 17:45:06 |
| [wlm] Jazakh Allah khair, br. Khalid, for your prompt reply and mental support. :-X |
| 10/01/02 at 17:46:54 |
| ibnasabil |
| Re: Teachers' Retirement Fund: Halal or not? |
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| bhaloo |
| 10/01/02 at 20:35:47 |
| [slm] Hmmm, was there a question posted on this here? It sounds a lot like the 401k and IRA questions asked of Dr. Siddiqqi (former ISNA president). Here was the question and the answer given by him. Q. I have a question about Zakat on 401K or IRA accounts. As you know these are retirement plans that many companies offer to their employees. Some time employee has to contribute to it to be eligible for any withdrawals or some time companies deposit money for their employees. Either case employees are not suppose to take money out of these accounts until the age of 59 and 1/2 years. But if you want to take money out of this account than you have to pay 10%penalty as well as taxes according to your current tax bracket. My question is do we need to include this amount when calculating Zakat amount or we don’t have to include it. and we should include these amounts how much? What I normally do I look at the balance and calculate net amount I could get if I make a withdrawal today and pay Zakat on that amount. Is this correct? I appreciate if you answer my question before Ramadan ends. thank you very much. Dr. Siddiqqi answered: A. I have written on this subject before. In the following I am reproducing my earlier answer to this question. The basic rule of Zakat is that it is due on the wealth that one owns and has the freedom to use. I think this 401K Account is similar to what is called “Provident Fund” in India and Pakistan. A committee of ‘Ulama’ under the leadership of Maulana Mujahidul-Islam Qasmi discussed this issue in great detail. In the light of the discussion of the scholars the following points can be presented: The employee’s contribution to this fund is Zakatable if it is done by his/her own choice. There is no Zakat due on these funds if they are collected compulsorily by the employers due to the company or government’s policies. Zakat will be due on these funds when they can be withdrawn. There is no Zakat due on the company’s matching contributions until they can be withdrawn. When these funds can be withdrawn, then if they reach the value of Nisab (3 ounces of gold or its cash value) and a year passes on them, then the Zakat (at the ration of 2.5 per cent) will be due. The Zakat must be paid for the money that one receives and then voluntarily contributes to a retirement fund (such as IRA etc.), if it reaches the Nisab and after a period of one year. (For more discussion on this subject one can consult, Majallah Fiqh Islami, Masa’il al-Zakat, volume 5, part 2, Qazi Publishers, New Delhi, 1994) Zakat for Mosque Construction |
| Re: Teachers' Retirement Fund: Halal or not? |
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| ibnasabil |
| 10/03/02 at 20:38:25 |
| Jazakh Allah khair brother Bhaloo. [wlm] |
| 10/03/02 at 20:39:05 |
| ibnasabil |
| Re: Teachers' Retirement Fund: Halal or not? |
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| ibnasabil |
| 10/08/02 at 14:25:51 |
By the way, yes there was a detailed question at the beginning of this thread but I deleted it because I was too embarrassed by it. I think it is wrong, obviously, for these funds to be required by law, and for a Muslim teacher to find out about it when the semester is already in full swing is to be put in a compromising situation. What I can say, then, is that it is important for Muslims to be not sufficiently, but completely, educated about the work environment and economic constraints that they are engaging with when accepting a job. This is difficult, I have found, because full disclosure is not a priority of most employers that I have encountered. And Allah knows best. Finally, I wonder if there is any kind of Muslim teachers' resource in the US. [slm] |
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