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.