Halal IRA: How to Build a Sharia-Compliant Retirement Account

An Individual Retirement Account gives Muslim Americans more control over their retirement investments than a 401k. With an IRA, you choose the brokerage and the specific investments, making full halal compliance much more achievable.

Traditional IRA vs Roth IRA

A Traditional IRA provides an upfront tax deduction on contributions, with taxes paid on withdrawal. A Roth IRA uses after-tax money but all growth and withdrawals are tax-free. For most Muslims focused on halal compliance, the Roth IRA is particularly attractive since the long-term tax-free growth maximizes the benefit of halal compounding.

Where to Open a Halal IRA

Wahed Invest offers a dedicated Halal IRA available to US residents. Alternatively, any major brokerage allows you to open a self-directed IRA where you can buy individual halal stocks, sukuk, or Islamic ETFs.

What to Hold

A halal IRA portfolio might include individual halal-screened stocks across technology, healthcare, and consumer sectors, Islamic ETFs from providers like Wahed or SP Funds, and sukuk funds for the fixed-income portion.

Contribution Limits

For 2026, the IRA contribution limit is $7,000 per year, or $8,000 if you are 50 or older. This modest limit means starting early and investing consistently is essential to meaningful retirement wealth accumulation.

Avoid These

Do not hold conventional bond funds, bank stocks, insurance stocks, or REITs with interest-heavy balance sheets. These are the most common compliance issues in retirement accounts.