A halal Roth IRA is an ordinary Roth IRA that holds only Shariah-screened investments. The account is a tax wrapper defined by the IRS, so the ruling turns on what you put inside it, not on the label on the statement. For 2026 the IRS allows contributions of up to $7,500, or $8,600 if you are 50 or older, and eligibility phases out above $153,000 of income for single filers. This guide covers which custodian to use, which US-listed halal ETFs and mutual funds to hold, how to stop uninvested cash from earning interest, and how the account fits into the wider Muslim retirement planning hub.
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Is a Roth IRA halal? The wrapper is neutral
A Roth IRA is a set of tax rules, not a financial product. You contribute money that has already been taxed, the investments grow without annual tax, and qualified withdrawals after age 59 and a half are tax-free once the account has been open five years. Nothing in that structure involves lending money at interest, so the account itself raises no riba question. The question is what the money buys once it arrives. A Roth IRA holding a conventional bond fund or an unscreened S&P 500 index fund is not halal; the same account holding SPUS and SPSK is. Our Roth IRA verdict page covers the ruling in more detail. The rest of this page is about execution.
Two features make the Roth wrapper attractive for a halal portfolio. Purification is simpler, because growth is never taxed, so any small impermissible income you give away carries no tax cost. And contributions (not earnings) can be withdrawn at any time without tax or penalty.
2026 Roth IRA contribution limits and income phase-outs
The IRS published the 2026 figures in its annual cost-of-living notice. The limits below are shared across all your IRAs combined, traditional and Roth, so $7,500 is the total, not a per-account figure. You also need earned income (wages or self-employment income) at least equal to what you contribute, unless you are using a spousal IRA based on a working spouse's income.
| Item | 2026 figure (irs.gov) |
|---|---|
| Contribution limit, under age 50 | $7,500 |
| Catch-up contribution, age 50 and over | $1,100 extra, so $8,600 total |
| Income phase-out, single or head of household | $153,000 to $168,000 modified AGI |
| Income phase-out, married filing jointly | $242,000 to $252,000 modified AGI |
| Income phase-out, married filing separately | $0 to $10,000 modified AGI |
| Deadline for 2026 contributions | Your 2026 tax filing deadline the following April |
Inside the phase-out band, your allowed contribution shrinks in proportion to how far into the band your income falls; above the top of the band, direct contributions are not allowed at all. The IRS worksheet in Publication 590-A does the arithmetic. If you are above the band, skip to the backdoor Roth section below.
Which custodian: self-directed or managed?
You have two real choices. A self-directed Roth IRA at a mainstream broker such as Fidelity or Schwab gives you access to every US-listed halal ETF and most halal mutual funds, with no advisory fee, but you make every decision yourself. A managed Roth IRA at a halal-only firm picks the funds for you in exchange for a wrap fee. The table below uses figures from each provider's own site.
| Route | Who picks the funds | Minimum to start | Ongoing cost | Best for |
|---|---|---|---|---|
| Fidelity or Schwab self-directed Roth IRA | You | The price of one ETF share | No advisory fee; the broker's commission and mutual fund transaction fee schedule applies | Readers comfortable choosing three or four funds |
| Wahed Invest managed Roth IRA | Wahed | $100 | 0.49% a year plus $60 a year on balances under $100,000; 0.49% a year above that | Hands-off investors with small balances |
| Amana Funds direct at Saturna | You, from Amana funds only | $100 per fund | Fund expense ratios only (0.86% for AMAGX Investor shares, 1.01% for AMANX Investor shares) | Investors who want active management and one fund family |
| ShariaPortfolio | A human advisor or its robo service | $1,000 for the robo option; $100,000 for human advice | Advisory fee per its Form ADV, on top of fund costs | Larger balances that want a planner |
Wahed Invest is the simplest route for a first account: a $100 minimum, a Roth IRA option in the app, and portfolios built entirely from screened funds. Amana Funds suits someone who wants four decades of actively managed Shariah funds and is happy with a $100 minimum per fund. ShariaPortfolio is the full-service option. For most readers who are willing to place a handful of trades a year, the self-directed broker route costs the least over time; the halal robo-advisor comparison weighs the managed options against each other.
Which halal funds to hold in a Roth IRA
Seven US-listed funds cover almost every allocation a Roth IRA needs. The equity ETFs from SP Funds and Wahed track published Shariah indexes, the two Amana funds are actively managed, and SPSK and SPRE provide the sukuk and real estate sleeves. Expense ratios below are from the fund pages on October 1, 2026.
| Fund | Ticker | Type | What it tracks or does | Expense ratio |
|---|---|---|---|---|
| SP Funds S&P 500 Sharia Industry Exclusions ETF | SPUS | ETF | S&P 500 Shariah Industry Exclusions Index, 219 holdings | 0.45% |
| Wahed FTSE USA Shariah ETF | HLAL | ETF | FTSE USA Shariah Index | 0.50% |
| Wahed Dow Jones Islamic World ETF | UMMA | ETF | Dow Jones Islamic Market International Titans 100 Index | 0.65% |
| SP Funds Dow Jones Global Sukuk ETF | SPSK | ETF | Dow Jones Sukuk Total Return Index | 0.50% |
| SP Funds S&P Global REIT Sharia ETF | SPRE | ETF | S&P Global All Equity REIT Shariah Capped Index | 0.50% |
| Amana Growth Fund | AMAGX | Mutual fund | Actively managed US growth equities | 0.86% Investor, 0.61% Institutional |
| Amana Income Fund | AMANX | Mutual fund | Actively managed dividend-paying equities | 1.01% Investor, 0.76% Institutional |
SPUS and HLAL overlap heavily because both screen the large-cap US market; most investors hold one or the other, not both. UMMA adds non-US developed and emerging market companies. SPSK is the closest thing to a bond fund that passes a Shariah screen, with a 30-day SEC yield of 5.04% as of September 30, 2026 on the SP Funds site. SPRE adds income from screened real estate investment trusts, with a 30-day SEC yield of 2.50% on the same date.
The cash sweep problem and how to fix it
Every brokerage Roth IRA parks uninvested cash somewhere, and that somewhere usually earns interest. At Fidelity the default core position is a government money market fund such as SPAXX; at Schwab uninvested cash goes to an interest-bearing bank sweep. Neither is halal to hold deliberately. Our SPAXX verdict page explains why a Treasury money market fund fails the screen.
The fix has three parts. Invest contributions as soon as they settle rather than leaving them in the core position for weeks. Turn off any automatic dividend-to-cash setting that lets income pile up, or reinvest dividends into the fund that paid them. And at least once a year, read the account's 1099-R or year-end statement, find the interest or money market dividends the sweep paid, and give that amount to charity without expecting reward. Managed accounts at Wahed hold cash in a non-interest-bearing position by design, which removes the issue; ask Amana or ShariaPortfolio how they handle idle cash before you fund the account.
Backdoor Roth for high earners and why the pro-rata rule matters
If your income is above the phase-out band, you can still fund a Roth IRA indirectly. You make a non-deductible contribution to a traditional IRA (the same $7,500 or $8,600 limit), then convert that balance to a Roth IRA. The conversion is a taxable event, but since the contribution was already after-tax, only the growth between contribution and conversion is taxed. Nothing in either step involves riba; both are tax mechanics.
The trap is the pro-rata rule. The IRS treats all your traditional, SEP and SIMPLE IRAs as one pool when you convert. If you hold a $90,000 rollover IRA from an old 401(k) and convert a $7,500 non-deductible contribution, the IRS treats the conversion as coming proportionally from pre-tax and after-tax money, and most of it becomes taxable income. Form 8606 tracks the after-tax basis. The usual workaround is to roll pre-tax IRA balances into a current employer 401(k) first, if the plan accepts roll-ins, so that the only IRA money left is the after-tax contribution.
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Three model allocations by age
These are illustrations using only the funds in the table above, not personal advice. Adjust for other accounts you hold, your home equity and how soon you will need the money.
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- Ages 20 to 35, long horizon: 55% SPUS or HLAL, 25% UMMA, 10% SPRE, 10% SPSK. Equity-heavy because the money has decades to recover from any downturn.
- Ages 36 to 50, balancing growth and stability: 45% SPUS or HLAL, 20% UMMA, 10% SPRE, 25% SPSK. The sukuk sleeve starts to matter as the balance grows.
- Ages 51 and over, approaching withdrawals: 35% SPUS or HLAL, 10% UMMA, 10% SPRE, 45% SPSK. An investor who prefers active management can swap AMANX for part of the equity sleeve for its dividend focus.
How to open a halal Roth IRA step by step
- Confirm eligibility against the 2026 phase-out table above using your expected modified adjusted gross income.
- Choose the route: self-directed at Fidelity or Schwab, managed at Wahed, or direct at Saturna for Amana funds.
- Open the account online, selecting 'Roth IRA' as the account type and 2026 as the contribution year when you fund it.
- Transfer the contribution from your checking account. You can send the full $7,500 at once or set up monthly transfers of $625.
- Place the trades on the day the cash settles so it does not sit in the sweep. For mutual funds, check whether the broker charges a transaction fee on Amana funds before buying.
- Set dividends to reinvest, and set a calendar reminder to review the allocation and purify any sweep interest each year.
Zakat on a Roth IRA balance
A Roth IRA is zakatable, and the main disagreement among scholars is on the base. One view is to pay 2.5% on the full market value each year because you have constructive access to the money, with contributions available penalty-free at any time. A second view is to pay on the amount you could actually withdraw today after any taxes and the 10% early withdrawal penalty on earnings, which for a Roth means contributions in full plus earnings net of penalty. A third view defers zakat on retirement money until it is withdrawn, then pays for one year. The zakat on retirement accounts guide sets out each position with its reasoning and shows the calculation on a worked balance.
Verdict: which route to take
If you are willing to place a few trades a year, open a self-directed Roth IRA at Fidelity or Schwab, hold SPUS or HLAL as the core with SPSK and SPRE around it, and invest contributions the day they settle. The all-in cost is the fund expense ratios, roughly 0.45% to 0.65%, with no wrap fee. If you want nothing to do with fund selection, Wahed's managed Roth IRA at $100 to start is the cleanest hands-off option, and its cash handling avoids the sweep issue. Amana direct suits investors who want active management from one family. High earners should use the backdoor route only after moving pre-tax IRA balances into a 401(k). Facts checked against irs.gov, fidelity.com, wahed.com, saturna.com, sp-funds.com and shariaportfolio.com on October 1, 2026.
Frequently asked questions
Is a Roth IRA halal?
Yes, provided the investments inside it are halal. The Roth IRA is a tax wrapper created by the IRS; it does not lend or borrow money, so it involves no riba on its own. The ruling depends on the holdings. A Roth IRA filled with Shariah-screened ETFs or mutual funds such as SPUS, HLAL or the Amana funds is permissible; the same account holding conventional bond funds or an unscreened index fund is not.
How much can I put in a Roth IRA in 2026?
The IRS limit for 2026 is $7,500, or $8,600 if you are 50 or older by the end of the year, shared across all your traditional and Roth IRAs combined. Direct contributions phase out between $153,000 and $168,000 of modified adjusted gross income for single filers and $242,000 to $252,000 for married couples filing jointly. You also need earned income at least equal to the amount you contribute.
What are the best halal funds for a Roth IRA?
For a low-cost core, SPUS (0.45%) or HLAL (0.50%) covers US large caps, UMMA (0.65%) adds international stocks, SPSK (0.50%) provides sukuk income and SPRE (0.50%) adds screened real estate. Investors who prefer active management can use Amana Growth (AMAGX, 0.86% Investor shares) and Amana Income (AMANX, 1.01% Investor shares). Hold SPUS or HLAL, not both, because they overlap heavily.
Can I open a halal Roth IRA at Fidelity or Schwab?
Yes. Both brokers let you open a Roth IRA online and buy any US-listed halal ETF, and they carry most halal mutual funds, sometimes with a transaction fee. The one thing to manage is the cash sweep: Fidelity's default core position is a government money market fund and Schwab's is an interest-bearing bank sweep. Invest contributions promptly and purify any interest the sweep pays by giving it to charity.
What is a backdoor Roth IRA and is it allowed in Islam?
A backdoor Roth is a non-deductible contribution to a traditional IRA followed by a conversion to a Roth IRA, used by people above the income phase-out. Both steps are tax mechanics with no lending involved, so there is no Shariah objection to the method itself. The practical risk is the IRS pro-rata rule: if you hold other pre-tax IRA money, part of the conversion becomes taxable. Roll pre-tax IRA balances into a 401(k) first where possible.
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Do I pay zakat on my Roth IRA?
Most scholars say yes, because you own the assets and can access contributions at any time. The common approaches are to pay 2.5% on the full market value each year, to pay on the net amount you could withdraw today after any penalty on earnings, or to defer zakat until withdrawal. Pick one approach with a scholar you trust and apply it consistently; the zakat on retirement accounts guide works through each method.
