diff --git a/config/hooks/installed/luks-kdf-configure.sh b/config/hooks/installed/luks-kdf-configure.sh
new file mode 100755
index 0000000..5f0639e
--- /dev/null
+++ b/config/hooks/installed/luks-kdf-configure.sh
@@ -0,0 +1,138 @@
+#!/bin/bash
+# LUKS KDF configuration hook - Convert PBKDF2 to Argon2id
+# Addresses FINDING-005: Argon2id KDF not explicitly configured
+#
+# Debian partman-crypto does not support preseed configuration for KDF type.
+# Default LUKS2 uses PBKDF2. This hook creates tools for user-initiated
+# conversion to Argon2id (more resistant to GPU-based attacks).
+#
+# Reference: PRD.md FR-001, security-model.md
+# Copyright 2026 Known Element Enterprises LLC
+# License: GNU Affero General Public License v3.0 only
+set -euo pipefail
+
+echo "Configuring LUKS KDF optimization tools..."
+
+# Create the KDF conversion helper script
+cat > /usr/local/bin/convert-luks-kdf.sh <<'SCRIPT'
+#!/bin/bash
+# Convert LUKS2 KDF from PBKDF2 to Argon2id
+# Run this script with sudo after first boot
+set -euo pipefail
+
+echo "================================================================================"
+echo "  KNEL-Football Secure OS - LUKS KDF Optimization"
+echo "================================================================================"
+echo ""
+echo "This script converts your LUKS2 key derivation function to Argon2id."
+echo "Argon2id provides better resistance against GPU-based brute force attacks."
+echo ""
+echo "You will need to enter your encryption passphrase."
+echo ""
+
+# Check root privileges
+if [ "$EUID" -ne 0 ]; then
+    echo "ERROR: This script must be run as root (use sudo)"
+    exit 1
+fi
+
+# Find the LUKS device (typically /dev/sda3 or /dev/nvme0n1p3)
+LUKS_DEVICE=""
+for dev in /dev/sda3 /dev/nvme0n1p3 /dev/vda3; do
+    if [ -b "$dev" ] && cryptsetup isLuks "$dev" 2>/dev/null; then
+        LUKS_DEVICE="$dev"
+        break
+    fi
+done
+
+if [ -z "$LUKS_DEVICE" ]; then
+    echo "ERROR: No LUKS device found"
+    echo "Checked: /dev/sda3, /dev/nvme0n1p3, /dev/vda3"
+    exit 1
+fi
+
+echo "Found LUKS device: $LUKS_DEVICE"
+echo ""
+
+# Check current KDF
+CURRENT_KDF=$(cryptsetup luksDump "$LUKS_DEVICE" 2>/dev/null | grep -E "^\s+KDF:" | head -1 | awk '{print $2}' || echo "unknown")
+echo "Current KDF: $CURRENT_KDF"
+
+if [ "$CURRENT_KDF" = "argon2id" ]; then
+    echo ""
+    echo "SUCCESS: KDF is already configured as Argon2id"
+    echo "No conversion needed."
+
+    # Mark as done so reminder stops appearing
+    touch /var/lib/knel-kdf-optimized
+    exit 0
+fi
+
+echo ""
+echo "Converting KDF to Argon2id..."
+echo "This will not change your passphrase, only the key derivation function."
+echo ""
+
+# Convert to Argon2id
+# Note: luksConvertKey requires entering the existing passphrase
+if cryptsetup luksConvertKey "$LUKS_DEVICE" --pbkdf argon2id; then
+    echo ""
+    echo "================================================================================"
+    echo "  SUCCESS: KDF converted to Argon2id"
+    echo "================================================================================"
+    echo ""
+    echo "Your LUKS encryption now uses Argon2id key derivation function."
+    echo "This provides better protection against brute force attacks."
+    echo ""
+
+    # Mark as done so reminder stops appearing
+    touch /var/lib/knel-kdf-optimized
+
+    # Verify the conversion
+    NEW_KDF=$(cryptsetup luksDump "$LUKS_DEVICE" 2>/dev/null | grep -E "^\s+KDF:" | head -1 | awk '{print $2}')
+    echo "Verified KDF: $NEW_KDF"
+else
+    echo ""
+    echo "ERROR: KDF conversion failed"
+    echo "This may happen if the passphrase was incorrect."
+    echo "Your encryption is still working with the previous KDF."
+    exit 1
+fi
+SCRIPT
+
+chmod +x /usr/local/bin/convert-luks-kdf.sh
+
+# Create login reminder for the user
+cat > /etc/profile.d/knel-kdf-reminder.sh <<'REMINDER'
+#!/bin/sh
+# Reminder to optimize LUKS KDF (runs on login until completed)
+# This file is removed/modified after KDF conversion
+
+if [ ! -f /var/lib/knel-kdf-optimized ] && [ "$EUID" -eq 0 ]; then
+    echo ""
+    echo "================================================================================"
+    echo "  SECURITY RECOMMENDATION: Optimize LUKS Key Derivation Function"
+    echo "================================================================================"
+    echo ""
+    echo "Your system uses LUKS2 disk encryption. The default key derivation function"
+    echo "(PBKDF2) can be upgraded to Argon2id for better security."
+    echo ""
+    echo "To upgrade, run:"
+    echo "    sudo /usr/local/bin/convert-luks-kdf.sh"
+    echo ""
+    echo "This is optional but recommended for enhanced protection against"
+    echo "GPU-based brute force attacks."
+    echo ""
+fi
+REMINDER
+
+chmod +x /etc/profile.d/knel-kdf-reminder.sh
+
+# Update the README to reflect the actual configuration
+if [ -f /var/backups/keys/README.txt ]; then
+    sed -i 's/- KDF: Argon2id/- KDF: Argon2id (run \/usr\/local\/bin\/convert-luks-kdf.sh to enable)/' /var/backups/keys/README.txt 2>/dev/null || true
+fi
+
+echo "LUKS KDF optimization tools configured."
+echo "Helper script: /usr/local/bin/convert-luks-kdf.sh"
+echo "User reminder: /etc/profile.d/knel-kdf-reminder.sh"
diff --git a/tests/unit/encryption-setup_test.bats b/tests/unit/encryption-setup_test.bats
index 139792c..568f468 100644
--- a/tests/unit/encryption-setup_test.bats
+++ b/tests/unit/encryption-setup_test.bats
@@ -54,3 +54,25 @@
 @test "Encryption setup configures GRUB" {
     grep -q "grub" /workspace/config/hooks/installed/encryption-setup.sh
 }
+
+# =============================================================================
+# Argon2id KDF Configuration (FINDING-005)
+# =============================================================================
+
+@test "Argon2id KDF configuration hook or script exists" {
+    # Either a dedicated KDF hook or configuration in encryption-setup.sh
+    [ -f "/workspace/config/hooks/installed/luks-kdf-configure.sh" ] || \
+    grep -q "argon2id\|luksConvertKey" /workspace/config/hooks/installed/encryption-setup.sh
+}
+
+@test "KDF conversion helper script is created" {
+    # encryption-setup.sh should create a helper script for KDF conversion
+    grep -q "convert.*kdf\|kdf.*convert\|luksConvertKey" /workspace/config/hooks/installed/encryption-setup.sh || \
+    [ -f "/workspace/config/hooks/installed/luks-kdf-configure.sh" ]
+}
+
+@test "User receives notification about KDF optimization" {
+    # A reminder should be created for the user to optimize KDF
+    grep -q "profile.d\|motd\|reminder" /workspace/config/hooks/installed/encryption-setup.sh || \
+    [ -f "/workspace/config/hooks/installed/luks-kdf-configure.sh" ]
+}