Why this is correct (Q11 — total $25,000): The question combined a stated regular contribution limit and an eligible catch-up amount. Conceptually, a “catch-up” contribution is an additional permitted contribution available to eligible participants (normally older savers) on top of the regular contribution limit. When both the base limit and the catch-up amount apply, the arithmetic is a simple addition: total allowable contribution = regular limit + catch-up amount. In this example the regular contribution limit was $20,000 and the catch-up amount was $5,000. Adding the two produces $25,000—this is the total maximum you can contribute in that year if you qualify for the catch-up. The reason this works as a single-year total is that catch-up contributions are designed to be an extra allowance layered on top of the base limit, not a replacement. Many people find this useful when they start saving later or want to accelerate savings as retirement nears. It’s important to treat the catch-up as distinct from employer contributions: employer matches are separate inflows and do not change the employee’s permissible elective deferral ceiling.

Practical takeaway & how to apply it: If you’re eligible for catch-up contributions, factor them into your budgeting and payroll deferral elections. Increasing your payroll deferral to include the catch-up amount can materially raise your retirement savings for the year—especially helpful if you received a raise or windfall and want to put extra money away. Check plan rules because catch-up eligibility and the exact permitted amounts depend on plan design and regulation. Also remember that catch-up contributions may have tax implications depending on whether they are Roth or pre-tax. If your payroll system supports it, allocate the catch-up as a separate election so it’s clear on paystubs. Finally, consider catch-ups as part of an overall end-game plan: they’re most useful when you have emergency savings covered and you’re prioritizing retirement accumulation.