401k-plan-decoder

# 401k Plan Decoder Skill

Nobody reads the 401k enrollment packet, which is how a 0.9% expense ratio quietly eats six figures of a career's compounding. This skill reads it: what the funds actually cost in dollars over time, what the match really promises once vesting and true-up fine print are applied, and which plan features (Roth option, brokerage window, loan terms) matter for this person. It decodes cost and structure — it never picks investments.

## What This Skill Produces

- The fee decode: each relevant expense ratio and admin fee converted to dollars-over-career on the user's numbers
- Match math with the fine print applied: per-paycheck vs. annual true-up, vesting schedule, what leaving at year N forfeits
- Fund-lineup triage by cost tier — where the cheap broad-market building blocks are, and which funds cost 10× a near-identical neighbor
- Feature decode (Roth 401k, after-tax + conversions if offered, loans, brokerage window) and the questions for HR/administrator

## Required Inputs

Ask for these only if they aren't already provided:

- **The plan documents** — fund lineup with expense ratios (the fee disclosure / 404a-5 notice is the gold source), match formula, vesting schedule, summary plan description excerpts. Decode what's provided; list what's missing by name.
- **Their numbers** — salary, current contribution %, balance, and age band — needed to make fees and match concrete.
- **Tenure expectation** — vesting math is meaningless without it.

## Framework: Severity Scale

- 🔴 **Can cost you real money** — expense ratios ≥ ~0.75% on funds with cheap index alternatives in the same lineup (compute the career cost), per-participant admin fees charged to the employee on small balances, match computed per-paycheck *without* an annual true-up (front-loading or uneven contributions forfeit match — quote the formula), long cliff vesting against their expected tenure, contributing below the full match threshold (the only guaranteed 50–100% return in finance, being declined).
- 🟡 **Unusual — check before relying on it** — target-date funds built from expensive underlying funds (decode the layered cost), loan provisions that require immediate repayment at separation, forced rollout of small balances, revenue-sharing arrangements buried in the fee notice.
- 🟢 **Standard** — ordinary match formulas, graded vesting, a lineup containing low-cost index options; label the good parts explicitly — a decent plan deserves to be trusted.

Always show the arithmetic:
1. **Fee drag** — balance and contributions compounded at a stated assumed return, with and without the fee delta, over the years to retirement age band; present the gap in dollars with assumptions labeled.
2. **Match math** — the formula applied to their salary; the per-paycheck-vs-true-up check with a concrete forfeiture scenario if applicable.
3. **Vesting math** — dollars forfeited if they leave at their stated expected tenure.

## Output Format

### 401k Decode: [employer plan]

**1. The verdict** — is the match fully captured, what the fees cost over a career, and the one change worth making this week.

**2. The fee decode** — admin fees + expense ratios in dollars-over-time, arithmetic shown, assumptions labeled.

**3. Match & vesting math** — formula applied, true-up check, forfeiture at stated tenure.

**4. Fund lineup triage**

| Fund | Expense ratio | Cost tier | Note (cheap-neighbor comparison, layered costs) |
|---|---|---|---|

**5. Feature decode** — Roth option, after-tax/conversion availability, loans, brokerage window — what each is, who it tends to matter for, flagged `[to confirm]` where the documents are silent.

**6. Questions for HR / the administrator** — missing documents, true-up confirmation in writing, fee-disclosure request.

End the artifact with, verbatim: *"This is a plain-language reading, not legal/financial advice — laws vary by jurisdiction; confirm anything load-bearing with a qualified professional."*

## Quality Checks

- [ ] Every fee is converted to dollars-over-time with assumptions labeled, never left as a percentage
- [ ] The per-paycheck vs. true-up distinction is checked and quoted from the documents
- [ ] Vesting forfeiture is computed at the user's stated tenure
- [ ] Cost-tier triage compares funds *within this lineup*, not against the whole market
- [ ] Missing documents are listed by name, and silent features are `[to confirm]`
- [ ] The disclaimer line appears verbatim in the artifact

## Anti-Patterns

- [ ] Do not recommend specific funds or allocations — decode cost and structure; the picking is the user's (or their advisor's)
- [ ] Do not invent fees or plan terms that aren't in the documents
- [ ] Do not present the fee-drag projection as a prediction — it's an illustration with labeled assumptions
- [ ] Do not soften the below-the-match finding — declining free money is the headline, say it plainly
- [ ] Do not treat jurisdiction- and plan-specific rules (loans, withdrawals, protections) as universal

## Based On

Participant-side plan review practice — fee-disclosure auditing, match-formula fine print, vesting math, lineup cost triage.