What’s New with Roth IRAs in 2025?

If you’re working, saving money, or just starting to think about your future, you’ve probably heard someone mention a Roth IRA. It sounds fancy, but it’s actually simple, and a smart move for young adults (Gen Z) who want to grow their money over time.

Exciting updates in 2025 have made Roth IRAs more attractive than ever, particularly for Gen Z. In this blog post, we’ll dive into what a Roth IRA is, the key changes introduced in 2025, how to open one, and how at NebraskaLand Bank we can help you start saving early for a secure financial future.

So, What Is a Roth IRA?

A Roth IRA is a type of savings account for your future. But it’s different from a regular savings account, it’s designed to help your money grow without being taxed later.

When you put money into a Roth IRA, it grows over time. And when you take it out in retirement (as long as you follow the rules), you don’t have to pay taxes on it. That’s why many people call it a “tax-free” retirement account. Learn more about withdrawals, and fees rules here: https://www.NebraskaLandBank.com/Personal/Save/IRA/#Personal-IRA-Compare.

What’s New This Year and Why It Matters for Gen Z

Roth IRAs have always offered strong long-term benefits, but recent changes have made them even more attractive for younger savers. Here’s what’s new:

First, contribution limits saw an increase in 2025, allowing most young earners to save up to $7,000 annually. If you’re aged 50 or older, you can contribute up to $8,000.

For Gen Z workers just starting their careers, this means you can grow tax-free savings early—and with compounding, time is your best friend.

Second, income limits have been adjusted upward, which means more people now qualify to contribute. In the past, some savers were phased out based on how much money they made. In 2025, you can earn up to $150,000 (as a single filer) and still contribute the full amount. This is great news for younger professionals on the rise, you won’t be excluded just because you’re doing well financially.

Another legislative update allows more flexibility for employer-sponsored retirement plans to include Roth-style options. That means if your job offers a retirement plan, it may now give you a chance to set aside Roth contributions directly through payroll—without having to open a separate account yourself. This could make saving for retirement even easier and more automatic for Gen Z workers entering the workforce.

There have also been updates to catch-up contributions for savers aged 50 and over. While this change doesn’t impact Gen Z savers just yet, it’s an encouraging sign that lawmakers are prioritizing greater flexibility in retirement planning.

Bottom line: the rules are shifting in favor of younger savers who want more control over their money, more flexibility, and tax advantages down the road. If you’re in your 20s and thinking long-term, this is a great time to get started.

Can You Open a Roth IRA? Here’s What You Need to Know

You don’t need to be wealthy to open a Roth IRA. In fact, many people start with just a little each month. But there are a few things you need to qualify:

• You must earn money from a job or self-employment (like babysitting, part-time work, or freelancing).
• Your Modified Adjusted Gross Income (MAGI) must be below $150,000 for single filer, a threshold that most Gen Z workers easily meet.
• You can contribute up to $7,000 this year if you’re under 50.
• You have until April 15, 2026, to contribute for the 2025 tax year.

Even if you only save a little now, starting early can make a huge difference.

Ready to Start Saving?

Roth IRAs are growing in popularity, especially among younger savers who want tax-free growth and more flexibility. With recent changes making these accounts even more accessible, now’s a great time to learn more and consider opening one.

At NebraskaLand Bank, we’re here to help you understand your options and plan for the future, one step (and one dollar) at a time. Whether you’re just starting your first job or ready to take control of your finances, we’re ready to help you grow.