Costco employees could benefit as IRS raises 401(k) contribution limits for 2026

Costco workers who use the company’s 401(k) can defer up to $24,500 in 2026 after the Internal Revenue Service raised the annual limit from $23,500. For employees age 50 and older, the catch-up limit is $8,000, lifting many accounts to $32,500, while workers who turn 60, 61, 62 or 63 can save an extra $11,250 under the higher SECURE 2.0 catch-up category.

That matters at Costco because retirement is already part of the company’s pay package. Costco’s careers page lists both a 401(k) plan and an employee stock purchase plan, alongside hourly wage increases based on accumulated hours, extra compensation twice a year for tenured hourly employees, and leadership pay for supervisors and managers. The company also says it guarantees minimum scheduled hours for full-time and part-time employees and posts weekly schedules at least three weeks in advance, giving workers more predictability when they decide how much paycheck to send into retirement.

The best order of operations is the one that keeps cash flow intact. Emergency savings and high-interest debt come first, then the 401(k), then company stock. Costco’s stock purchase setup, which its investor materials route through Computershare, can be a useful perk, but it should not crowd out the basic goal of building a diversified retirement account. That is especially true for employees whose financial lives are already tied closely to one employer through wages, benefits, and tenure.

For a front-end assistant, stocker, forklift operator, bakery employee, or warehouse manager, the practical move is to revisit the deferral rate every time pay steps up. Costco’s wage structure makes that easier to do than in many retail jobs, because raises come with hours worked and longer service can bring additional compensation twice a year. Even a small percentage increase in a 401(k) contribution can capture more of that raise before it disappears into rent, gas, or groceries.

The new IRS limits are most meaningful for older workers who have already built up years on the floor or in leadership roles. A 60-year-old Costco employee can contribute up to $35,750 in a 401(k) in 2026 if eligible for the higher catch-up amount. That gives late-career workers more room to close the gap before retirement, while Costco’s steady scheduling and full-time emphasis, highlighted in its annual-report materials, make those choices part of the company’s broader compensation story.