401k Plan Decoder Skill

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.