Can a Muslim borrow money from his own 401(k) plan, with interest?

In addressing whether a Muslim can borrow money from their own 401(k) plan, particularly with interest, we must examine the principles of usury (riba) as outlined in the Qur'an and the interpretations provided by scholars.

According to the Qur'an, usury is categorically prohibited. For example, in Surah Al-Baqara, it states: O ye who believe! Observe your duty to Allah, and give up what remaineth (due to you) from usury, if ye are (in truth) believers. 2:278. This verse emphasizes the importance of refraining from any dealings that involve usury, indicating that true believers should avoid such practices.

Additionally, the Qur'an warns about the consequences of engaging in usury: Those who swallow usury cannot rise up save as he ariseth whom the devil hath prostrated by (his) touch. That is because they say: Trade is just like usury; whereas Allah permitteth trading and forbiddeth usury. He unto whom an admonition from his Lord cometh, and (he) refraineth (in obedience thereto), he shall keep (the profits of) that which is past, and his affair (henceforth) is with Allah. As for him who returneth (to usury) - Such are rightful owners of the Fire. They will abide therein. 2:275. This passage illustrates the gravity of the sin associated with usury and highlights the distinction between permissible trade and prohibited usurious practices.

In light of these verses, borrowing from a 401(k) plan with the intention of paying back with interest would fall under the category of usury, which is not permissible in Islamic finance. Therefore, Muslims are advised against such financial practices that involve interest, even if the loan is taken from their own retirement funds.

For specific rulings that apply to individual circumstances, it is always best to consult a qualified local scholar who can provide guidance tailored to one's personal situation.