Is there zakat on 401K?

[Captain1]

Re: Is there zakat on 401K?

@psyah

^ That’s only if you have had to pay the penalty first. If the money is untouched for a year then the zakatable amount is 100k, which is 2.5k in absolute terms.

From the $100k the 10% is deducted upfront (when withdrawn) by most brokerage houses and 20% is to be paid later on. Basically you can’t avoid the 30% penalty, so the $100k is not yours, effectively you only own $70k so you can’t be paying zakat on the money you don’t really own.