Costco’s 401(k) Match Isn’t Great. Here’s Where You Should Save Next

Trey Gevers CFP® |

Costco is great company to work for. They offer great benefits in many areas, but when it comes to the 401(k) match, their contribution is nothing to write home about. Costco matches 50% of the first $1,000 you contribute — which means the most you’ll get from the company is $500 per year.

That raises a fair question: If the match is that small, how much should I really be contributing to my 401(k)?

If you're a Costco employee contributing to your 401(k) or thinking about where to save next  here’s a step-by-step guide crafted by local Issaquah Financial advisors to help you make the most of your income and benefits:

 

Contribute Enough to Get the Full $500 Match

Even though it’s not huge, it’s free money. Make sure you're contributing at least $1,000 per year. 

 

Use a Roth IRA for Tax-Free Growth

After getting the Costco match, the next best place to save is a Roth IRA. You can invest in the same mutual funds/etfs you'd find in your 401(k), but the big difference is that your money grows tax-free and comes out tax-free in retirement.

  • 2025 limit: $7,000 per year (or $8,000 if over 50)
  • Income phase-out starts: Around $146,000 for single filers, $230,000 for married couples
  • If you are over the income limit, consider back door Roth IRA contributions

 

Keep Contributing to the 401(k) — If You're in a Higher Tax Bracket

Even though the match is limited, the 401(k) still gives you one of the largest tax shelters available. You can contribute up to $23,000 in 2025, or $30,500 if you're 50 or older. That’s a powerful way to reduce your taxable income now, especially if you’re in a higher tax bracket. 

Don’t Skip the HSA (If You’re on a High-Deductible Health Plan)

Costco offers a high-deductible plan option. If you're enrolled, take advantage of the Health Savings Account (HSA). It’s the only account with triple tax benefits — deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses.

2025 limits:

  • $4,300 for individuals
  • $8,550 for families
  • Add $1,000 more if you're 55 or older

 

Invest in a Brokerage Account

Once your tax-advantaged accounts are funded, use a regular brokerage account. There’s no limit to what you can contribute, and it gives you flexibility for goals like:

  • Early retirement
  • Buying a home
  • Supplementing your 401(k) in retirement
  • Tax Diversification in retirement 

 

Need Help Putting This Together?
We work with Costco employees to build financial strategies around real-life decisions — not just retirement, but tax savings, college planning, and growing long-term wealth.

If you want a clear plan for where your money should go and how to make it work harder for you, let’s talk.

Trey Gevers CFP®
Financial Advisor & Partner
Phone: 425-902-4840
Email:tgevers@geverswealth.com
5825 221st Pl SE
Suite 102
Issaquah, WA 98027
geverswealth.com