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Halal 401(k) vs conventional 401(k), wrapper vs holdings.
A 401(k) is a tax wrapper, not an investment product. The wrapper itself is permissible across mainstream Mufti opinions. Whether your 401(k) is halal depends entirely on what you hold inside it.
Dimension
Conventional 401(k)
Halal-screened 401(k)
Tax treatment
Same: pretax contributions, tax-deferred growth
Same: pretax contributions, tax-deferred growth
Employer match
Available
Available
Default holdings
Target-date funds with bonds and conventional equity
Halal-screened equity funds (Amana, HLAL, SPUS)
Bond exposure
Standard component of target-date glide path
Replaced with sukuk where available, otherwise cash
Setup
Default plan menu
Self-directed 401(k) or employer-added halal options
Verdict
Where each structure wins.
Open or keep the 401(k); replace the holdings. Set the contribution rate to capture the full employer match (the match itself is permissible compensation). Inside the wrapper, allocate to halal-screened funds and avoid the default target-date glide path. For specific fund choices, see /retirement.
Verdict above is editorial. A Mufti Saad signed verdict replaces this when corpus content covers the comparison.
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