True or False: If an employee has ownership in related organizations, this can affect the 5-percent owner test.

The statement is, in fact, true, meaning an employee having ownership in related organizations can impact the 5-percent owner test. The test is designed to determine if an employee is considered a 5-percent owner of the company sponsoring the 401(k) plan. If ownership stakes in related organizations are present, they can influence the overall ownership calculation across multiple entities.

For instance, if an employee owns more than 5% of a business and has related interests in other companies, this aggregated ownership could cause them to meet the criteria of a 5-percent owner across all related organizations. This interconnected ownership is significant in assessing eligibility for various plan benefits and participation.

The incorrect answer choice reflects a misunderstanding of how ownership across related entities is evaluated in the context of retirement plans and does not take into account the nuances of ownership stakes and control within affiliated organizations.