A note to the reader: In my last piece, I shared the importance of a 401(k) retirement account and explored the different ways you can set it up in a halal way. Below, we’re going to focus on some practical ways you can cleanse the gains in your retirement accounts from impermissible investments by way of purification.
Practical with some actionable takeaways. Worth your time if you’ve ever wondered about what to do with your employer’s contributions.
This is a great article. Thank you for the template. Have been avoiding 401ks but will be advocating for an self directed brokerage account to my employer
So happy you found it beneficial @Ahmer
for others wondering about the template, it’s from this blog post’s sister post. Link to the template below
Thank you for sharing this great article! Knowing that gains fluctuate, is the cash purification on monthy basis or annual?
Glad you found it useful!
Would your gains fluctuate? When I read the blog post, I only read it as actualized gains. As long as the money is still invested in the company, I’ve not made any gains. As for dividends, I think it makes sense to purify those every year. This is not financial advice, just my reading of the blog post.
What do you think?
Thank you for the article.
How do I figure out what is the %age of haram earnings, my 401k has, it was invested in Fidelity 500 fund.
Also the breakdown I have for 401k is the contributed amount, the change in value and the dividends so I will just need to purify the change in value and the dividends right?
Thanks
How do I figure out what is the %age of haram earnings, my 401k has, it was invested in Fidelity 500 fund.
The non-compliant percentage can be found in Zoya under the ticker FXAIX.
Also the breakdown I have for 401k is the contributed amount, the change in value and the dividends so I will just need to purify the change in value and the dividends right?
Correct.
I am trying to learn more about stocks so my husband’s investments earn a halal profit. His fidelity account by his company is invested in the Fidelity Target Fund 2055. I have tried to find the ticker symbol for it or even the holdings under it but was not successful. Also, I have only learned what a ticker symbol is this week so please don’t be surprised if my comment sounds a bit noobish. It would be really helpful if someone could help me figure out the non-compliant ratio of this fund. Jzk.
Also, this article is super helpful. Thank you sister and brothers.
Salam Aleykum dear experts. Can you please help me with my situation. I have sold many company shares through my Fidelity account and was not touching the cash from the shares. I then realized that i received dividends in my 1099-DIV Tax submission. Upon checking i realized that by default Fidelity placing all cash into Fidelity® Government Money Market Fund (SPAXX). Are these dividends received from this Mutual Fund considered as riba / haram? I have tried to do research on SPAXX in term of Shariah compliance, but couldn’t find any definitive answer. Your kind advice is highly appreciated.
Money market funds like SPAXX primarily invest in short-term debt securities, so the dividends they distribute are considered interest income.
Thank you for your prompt response brother Saad. I’ve tried to “change core position” where my cash money stored in Fidelity and there are only 2 options there: “FZFXX - Fidelity® Treasury Money Market Fund” and “FCASH - Taxable Interest Bearing Cash Option”. My default option is set to FZFXX, composition of which is 48.58% Repurchase agreements, 38.6% US Treasury Bills and 14.8% US Treasury Coupons. Based on your experience and knowledge should both options be avoided by Muslims and as result transfer money out of Fedelity cash right?
Just don’t leave any cash uninvested in your account. And if you do earn interest, then keep track of it and donate it.
Hello Saad,
I receive Dividend every month from FDRXX into my 401k account is it halal? Or I need to remove that amount from my gain?
FDRXX is a money market fund that invests in government securities like bonds and treasury bills. The dividends you receive are considered interest income and should be donated.
What about JPMorgan smart retirement 2040? I am trying to figure out the non compliant percentage through Zoya app but unable to pull the plan there. Can you please advise?