Zakāt on retirement accounts

Retirement accounts (RRSP, 401(k), IRA, pensions) didn't exist when the schools were codified, so there's no classical ruling. Contemporary scholars reason from two principles: treating holdings like investments, and the requirement of full ownership and access. This produces three main positions.

One view, pay each year on the full balance

The money is yours; an early-withdrawal penalty is a cost, not a loss of ownership. Pay 2.5% each year. Associated with the Fiqh Council of North America and many scholars.

Another view, pay each year on the zakatable proportion (the approach this app uses)

Pay 2.5% each year on the zakatable proportion of the fund (its cash, receivables and shares: a ~25% proxy, or the fund's factsheet). This reflects that a share/fund isn't zakatable at full value; it is not a reduction for being locked or penalised.

Position 3, Defer until accessible

If you can't access the funds without penalty, no zakāt is due until you can withdraw freely; then pay yearly. Strongest case for fully locked accounts (a locked-in LIRA, an employer pension, or a current-employer 401(k)).

How accessibility maps

Freely accessible (TFSA, savings, Roth contributions) → zakatable yearly like ordinary wealth. Penalty-accessible (RRSP, Traditional IRA, former-employer 401(k)) → the three-way choice applies. Truly locked (LIRA, pension, current 401(k)) → strongest case to defer.

In the app

Each retirement account has a treatment selector: full balance, zakatable proportion (~25%, editable), defer (a fallback view), or defined-benefit (exempt until received). The zakatable-proportion view is the default.