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I originally asked this question which I am splitting up.

Investments and shares for retirement: Pay while contributing on the contribution amount or pay when retiring and we are able to withdraw the amount? This link suggests to pay immediately, and I have also seen rulings where you are to pay when you receive it. In either case, there is the added complexity that "real value" of the investment changes daily and until we actually "realize" the investment by selling and getting cash, it is all paper gain/loss. How to deal with that?

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A question of this nature requires a fatwa specific to your situation and your retirement plan.

Generally speaking, zakāh is ordained on money that has been in one's possession for one Hijri year. Since in most cases, retirement funds are not in one's possessions, scholars are of the opinion that no zakāh is required until one assumes possession of said funds. You may refer to the following fatwas on Islam Q&A for more information:

It is worthy to note that retirement funds tend to have two types of additions on a regular basis:

  • Investment of sum already in the account
  • Additional contributions on a regular (annually, monthly, etc.) basis.

If the original sum of money increases due to profit or other forms relying solely on the original sum, then the calculation of the year is based on that of the original sum (Arabic: حول الربح حول أصله). If the original sum of money increases due to additional deposits or savings, then each additional deposit will have its own Hijri year for calculation of zakāh.

As for the percentage of the zakāh, it is 2.5% as per Sahih al-Bukhari, Hadith 1454.

Note: The link you provided where it says to pay zakāh immediately is no longer valid.

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