Which statement is true regarding income replacement objectives for executive retirement plans?

Income replacement objectives for executive retirement plans are designed to provide a certain level of income after retirement, ensuring that executives can maintain their standard of living. The flexibility in these objectives allows organizations to tailor the plans to meet the specific needs and goals of their executives, factoring in elements such as salary levels, benefits, and individual retirement goals.

The flexibility of executive retirement plans is particularly important because executives often have varying career trajectories and financial situations compared to typical employees. This allows for adjustments in the plan to accommodate changes in compensation, market conditions, or individual retirement goals, making it a more adaptive strategy.

In contrast, the other statements present limitations or misconceptions. Adhering strictly to federal minimums would not reflect the customized nature of executive retirement plans, which often aim to provide more generous benefits than what is legally required. Saying they are fixed and cannot change fails to recognize the dynamic nature of individual career paths and financial needs. Finally, associating income replacement objectives solely with long-serving employees undermines the fact that retirement planning considerations can and should apply to executives at various stages of their careers. Thus, flexibility stands out as the defining characteristic of income replacement objectives in executive retirement plans.