Understanding the Michelin 401k Savings Plan
Understanding the Michelin 401k Savings Plan
IntelliVest Wealth Management is not affiliated with, endorsed by, or sponsored by Michelin, Michelin North America, Inc., or by The Vanguard Group or any of its affiliates. "Michelin" and "Vanguard" are registered trademarks of their respective owners. This article is provided for educational purposes only and is not a solicitation, an offer, or individualized investment advice. Plan provisions change; always confirm details against your official plan documents. Plan details described here are drawn from the plan's Form 5500 filing with the U.S. Department of Labor for the 2024 plan year.
What is the Michelin 401(k) Savings Plan?
The Michelin 401(k) Savings Plan is how most Michelin North America employees build retirement savings. You contribute from each paycheck, Michelin adds money on top, and it grows invested over time.
What most participants don't realize is how much Michelin adds — or that the largest piece of it has nothing to do with whether you contribute at all.
One important note before we go further. Michelin sponsors more than one retirement savings plan. This article covers the Michelin 401(k) Savings Plan, which includes all salaried employees and wage employees who are not in the Michelin North America, Inc. Wage 401(k) Savings Plan or the American Synthetic Rubber Company Incentive Savings Plan. If you're in one of those plans, your provisions are different — check your statement or plan materials to confirm which plan you're in.
Michelin Puts Money In Whether You Contribute or Not
Most retirement plan articles start with the match. At Michelin, that's the smaller half of the story.
Separate from any match, Michelin makes an annual company contribution to your account based on your age plus your years of service. You don't have to contribute a dollar to receive it.
Add your age to your years of service. If you're 45 with 12 years in, that's 57 points. Then find your tier:
If you were hired on or before February 28, 2022:
Under 40 points — 3% of eligible compensation
40 to 49 points — 4%
50 to 59 points — 6%
60 points or more — 8%
If you were hired after February 28, 2022: a flat 3% of eligible compensation.
Read those two lists again, because the gap is larger than it looks. A long-tenured employee in the top tier receives 8% of pay every year automatically. A newer hire doing the same job receives 3%.
This contribution traces back to the Michelin Retirement Account Plan, which was folded into the 401(k) plan at the end of 2020. It's the successor to Michelin's traditional pension — which is why it rewards age and service the way a pension formula would.
The Michelin Match: 5% Is the Number
On top of the age-and-service contribution, Michelin matches what you put in:
100% of your first 3% of pre-tax and Roth contributions — dollar for dollar (Learn more about Roth IRAs here.)
50% of your next 2% — fifty cents on the dollar
Contribute 5% of your pay and you capture the full match, worth 4% of pay. Contribute more than 5% and the match doesn't grow.
Here's the detail worth noticing. Michelin automatically enrolls employees hired after August 31, 2005 at a 5% contribution rate, increasing 1% per year unless you change it. That starting rate is set exactly where the full match is captured.
Which means if you're contributing less than 5%, you didn't drift there — at some point you actively lowered it. And every year you stay below 5%, you're turning down employer money that's yours immediately.
One honest caveat, because we'd rather you hear it from us: the dollars between 3% and 5% are matched at 50%, not 100%. That's a worse deal than your first 3%. It's also still an instant 50% return, which is better than anything else available to you anywhere. Both are true, and the second is why you should do it.
A Worked Example: What Michelin Actually Puts In
Meet Dana. Dana is 52, has 20 years at Michelin, and earns $70,000. Age plus service puts her at 72 points — the top tier.
Age-and-service contribution at 8%: $5,600
Match, if she contributes 5%: $2,800
Total from Michelin: $8,400 a year
Her own 5% contribution is $3,500. So $11,900 goes into her account annually — about 17% of her pay, and roughly 70% of it is Michelin's money.
Now compare Marcus, hired in 2023, also earning $70,000. He receives the flat 3% — $2,100 — plus the same $2,800 match if he contributes 5%. That's $4,900 from Michelin instead of $8,400.
Same job, same salary, same contribution rate. A $3,500 difference every year, entirely because of hire date and tenure.
Marcus can't change his tier. What he can change is his own contribution rate — and for him the case for saving more of his own money is that much stronger, because less is arriving automatically.
These are hypothetical illustrations based on the contribution formulas described in the plan's 2024 Form 5500 filing. They are not projections of investment performance and do not represent any actual participant's results. Your own eligible compensation, tier, and contribution rate will differ.
Good News: It's All Yours Immediately
With most employer retirement contributions, the money isn't fully yours until you've put in enough years. Leave early and you forfeit part of it.
Not here. The plan document states that a participant's interest in all amounts allocated to their account is, at all times, fully vested and non-forfeitable.
That means your own contributions, the match, and the age-and-service contribution are 100% yours from the moment they land. No vesting schedule, no cliff, nothing forfeited if you leave.
For a contribution that can reach 8% of pay annually, that's unusually generous. It also simplifies your decision if you're weighing a move: whatever is in the account goes with you.
Three Ways to Contribute — and One Most People Miss
The plan lets you contribute in three ways:
Pre-tax. Lowers your taxable income now; you pay ordinary income tax on withdrawals in retirement.
Roth. No deduction today, but qualified withdrawals in retirement — contributions and all growth — come out tax-free. Michelin's Roth option is inside the 401(k), so there's no income limit the way there is with a Roth IRA.
After-tax. A separate category, allowed up to 10% of compensation, and this is the one almost nobody uses. It sits on top of your pre-tax and Roth contributions rather than counting against the same limit, and you can withdraw from your after-tax account at any time.
For higher earners already maxing out pre-tax or Roth contributions, the after-tax option opens up additional tax-advantaged saving that most participants never touch. Whether it makes sense depends on your bracket, your other accounts, and what you plan to do with the money later — it's worth a conversation before you elect it rather than after.
Borrowing From Your Michelin 401(k)
The plan permits loans. You can borrow a minimum of $750 up to the lesser of $50,000 or 50% of your account balance. Terms run up to five years, or up to 15 years if the loan is for purchasing a primary residence.
The interest rate is prime plus 1%. Loans outstanding at the end of 2024 carried rates between 4.25% and 9.5%, and repayment comes out of your paycheck.
A 401(k) loan is generally better than an early withdrawal, since you're not triggering taxes or the 10% penalty. But you're also pulling money out of the market while you repay it, and an unpaid balance can become a taxable distribution if you leave. Worth thinking through before you borrow.
Who Holds Your Plan, and How to Reach Your Account
The Michelin 401(k) Savings Plan is held at Vanguard Fiduciary Trust Company, which serves as trustee and recordkeeper.
Access your account through Vanguard's workplace retirement site — the exact address is on your statement and in your enrollment materials. If you're not sure, go to vanguard.com directly rather than clicking through from a search result.
Once you're in, check three things: your contribution rate (is it at least 5%?), whether you're contributing pre-tax, Roth, or both, and your investment allocation. Most people set these once at hire and never revisit them.
Leaving Michelin: Your Four Options
1. Leave it in the Michelin plan. Often underrated. A plan this size has access to institutional share classes you can't get retail. If the lineup is solid and the costs are low, staying might be the right answer.
2. Roll it into your new employer's plan. Can help consolidate your accounts. Compare the new plan's investment lineup and fees against Michelin's before you move.
3. Roll it into an IRA. Opens a far wider investment universe and lets your retirement assets be managed alongside everything else you own.
4. Cash it out. Almost never the right move. Ordinary income tax, plus a 10% penalty if you're under 59½. A $50,000 balance can shrink well below $35,000 before it reaches your bank account, and you permanently lose decades of tax-deferred growth.
There's no universally correct answer — it depends on your age, tax bracket, other accounts, and what you're trying to accomplish. If you'd like a second opinion on your situation, our consultations are complimentary.
Frequently Asked Questions
Does Michelin match 401(k) contributions?Yes. Michelin matches 100% of your first 3% of pre-tax and Roth contributions and 50% of your next 2%. Contributing 5% captures the full match, worth 4% of pay.
How much should I contribute to my Michelin 401(k) to get the full match?5% of your eligible compensation. Contributions above 5% are not matched, though they may still make sense for other reasons.
Does Michelin contribute to my 401(k) even if I don't?Yes. Michelin makes an annual company contribution based on your age plus years of service, paid regardless of whether you contribute. For employees hired on or before February 28, 2022 it ranges from 3% to 8% of eligible compensation depending on your tier. For employees hired after that date it is 3%.
When am I vested in the Michelin 401(k)?Immediately. All amounts allocated to your account — your contributions, the match, and the company contribution — are fully vested and non-forfeitable at all times.
Does the Michelin plan offer a Roth 401(k)?Yes. You may contribute pre-tax, Roth, or both, and separately may make after-tax contributions of up to 10% of compensation.
Can I take a loan from my Michelin 401(k)?Yes. Minimum $750, maximum the lesser of $50,000 or 50% of your account balance. The rate is prime plus 1%, and repayment is through payroll deduction.
When am I automatically enrolled in the Michelin 401(k)?Employees hired after August 31, 2005 who make no elective deferrals are automatically enrolled at a 5% pre-tax contribution rate, increasing 1% each year unless you elect otherwise.
Who holds the Michelin 401(k) Savings Plan?Vanguard Fiduciary Trust Company serves as trustee and recordkeeper.
Contact Us
Interested in a free consultation? Always feel free to reach out to us via our contact form here. You may also reach us at (864) 598-0000.
Disclosure
IntelliVest Wealth Management is a Registered Investment Advisor headquartered in Spartanburg, South Carolina. This is not a solicitation or financial advice, and this article should only be used for educational purposes. Plan details are drawn from the Michelin 401(k) Savings Plan's Form 5500 filing with the U.S. Department of Labor for the 2024 plan year and were accurate as of that filing. Plan provisions may change. Confirm your own plan provisions against your Summary Plan Description and current plan materials, and consult IntelliVest Wealth Management about your personal financial situation.
