True or False: Lookback year compensation is not relevant for determining HCE status.

The statement is false because lookback year compensation is indeed relevant for determining Highly Compensated Employee (HCE) status. In retirement planning, an HCE is defined based on compensation levels from the preceding year(s). Specifically, the IRS regulations outline that to be considered an HCE in the current year, an employee must have received compensation above a certain threshold (which can change annually) in the lookback year, typically the preceding year.

When assessing HCE status, the compensation from the lookback year is used to identify individuals who qualify for this designation, which influences various plan compliance testing requirements. Thus, understanding lookback years is crucial when determining HCE status for plan provisions, including contribution limits and nondiscrimination testing.