We all know no one is going to be working forever. They’re going to have to retire at some point of their lives. Employers know this, so they give options to their employees. Options include IRA (Individual Retirement Accounts) and 401k accounts. IRA accounts give flexibility to an investor. You will be able to choose which investments you want to make. It is much easier using an IRA account to invest according to Islamic criteria. Example: you will be able to choose which mutual fund you want to invest in. There are a number of Islamic mutual funds available, so take advantage!
401k accounts are a little different from IRA accounts. Taxes are not paid on money that is withdrawn from the account until you withdraw at retirement. Employers like 401k accounts because they are much simpler to set up. However, your ability to control which mutual funds your money is invested in will be severely limited to the list of choices selected by the employer. They may or may not include Islamic mutual funds.