Fatawa Answer

Question: 401 or 403 Retirement Plan

ID: 1684

Name: Dealings and Transactions



my question is out of 401 or 403 which Retirement Plan is in accordence of Islam. If you have some other suggestion please guide.


بسم اللہ الرحمٰن الرحیم

الجواب وباللہ التوفیق

The only difference between the 401 and 403 plans is that the 401 plan is for the employees of "for-profit "organizations and the 403 is for the employees of "non-profit" organizations. If there are no other differences, then according to the clarifications of the scholars, it is permissible according to the Shariah rules. 

However, if the company’s plan is mandatory, and the amount received later is more than your actual deposited money, then that extra amount of profit is permissible, without abomination “karahat”. 

But if the scheme is optional, then the profit on the deposited money should be given in charity. 

فقط واللہ اعلم واتم

Answered On: Wednesday, Jul 19, 2023 | N/A

Answered By: Mufti Mohammed Ataur Rahman Sajid

Checked By: Mufti Mohammed Navalur Rahman