Introduction – What is Publication 6087?
IRS Publication 6087, titled Cash or Deferred Arrangement (CODA) Listing of Required Modifications and Information Package (LRM), is an official IRS technical guide. It provides sample language and legal provisions that employers and retirement plan providers must include in their retirement plan documents to stay compliant with federal tax laws.
In official IRS records, Publication 6087 carries the revision date of March 2025 (posted by the IRS on March 25, 2025). This publication serves as the direct regulatory foundation for the 2026 retirement plan year. As employers approach the critical December 31, 2026 deadline to formally adopt required amendments under the SECURE 2.0 Act, the SECURE Act, and the CARES Act, Publication 6087 provides the exact blueprints necessary to keep retirement plans tax-qualified. It also guides administrators through the end of the administrative transition period leading into 2026 for mandatory high-earner Roth catch-up contributions.
Rather than a personal tax guide filled with calculations, this publication functions as a legal playbook. It guarantees that company-sponsored 401(k) plans follow the Internal Revenue Code so both workers and employers keep their tax deductions and tax-sheltered savings.
Who Should Read This Publication
Publication 6087 is primarily written for retirement industry professionals, but several groups benefit from understanding its rules:
- Retirement Plan Sponsors: Business owners and company executives who offer retirement plans to their workforce.
- Plan Document Providers: Financial institutions, payroll companies, and law firms that draft pre-approved 401(k) master documents.
- Human Resources and Benefits Teams: Professionals who manage daily plan operations and enroll employees.
- Everyday Employees and Savers: Workers who want to understand the exact federal rules governing their workplace paycheck deductions and employer matching contributions.
Key Topics Covered
Publication 6087 breaks down the legal machinery behind 401(k) plans and deferred savings programs. The main subjects include:
- Cash or Deferred Arrangements (CODAs): How employees elect to take cash wages or defer income into retirement accounts.
- Automatic Enrollment Programs: Rules for Eligible Automatic Contribution Arrangements (EACA) and Qualified Automatic Contribution Arrangements (QACA).
- Nondiscrimination Testing: The mechanics of the Actual Deferral Percentage (ADP) and Actual Contribution Percentage (ACP) tests.
- Safe Harbor Designs: Pre-set contribution formulas that let companies skip complicated annual nondiscrimination testing.
- SECURE 2.0 Act Upgrades: Standardized terms for part-time worker participation, emergency withdrawals, and catch-up contributions.
Detailed Breakdown of Main Concepts
1. What is a Cash or Deferred Arrangement (CODA)?
A CODA is a feature within a profit-sharing or stock bonus plan that allows eligible employees to make a choice. You can receive your compensation in taxable cash right away, or you can have a portion contributed directly into a retirement trust on your behalf. Under Section 401(k) of the Internal Revenue Code, amounts deferred into the trust are not subject to immediate federal income tax unless designated as Roth contributions.
2. Automatic Contribution Arrangements
Modern 401(k) plans frequently enroll new hires automatically unless the worker opts out. Publication 6087 gives employers exact model language for setting up these programs. It explains the default savings percentages, the schedule for annual automatic savings increases, and the 90-day window during which employees can opt out and withdraw default contributions without early-distribution penalties.
3. Nondiscrimination Testing (ADP and ACP Tests)
Federal tax law requires that retirement plans do not disproportionately favor business owners or highly paid executives over regular workers. The ADP test compares how much highly compensated employees defer compared to rank-and-file workers. Publication 6087 outlines the exact language plans must use to define compensation, calculate test ratios, and correct excess contributions if the plan fails testing at the end of the year.
4. Safe Harbor 401(k) Plans
To avoid annual nondiscrimination testing altogether, many employers choose a Safe Harbor plan design. Under Safe Harbor rules, the employer guarantees a minimum contribution for all eligible workers, such as a 3% across-the-board non-elective contribution or a 4% matching contribution. Publication 6087 specifies the exact mandatory notice provisions and vesting terms required for these plans.
5. SECURE 2.0 Updates
The publication incorporates substantial reforms introduced by the SECURE 2.0 Act. These include lower service requirements allowing long-term, part-time employees to save, as well as rules clarifying higher catch-up contribution limits and mandatory Roth designations for higher-wage earners.
Practical Examples or Scenarios
Scenario 1: Small Business Adopting Safe Harbor Language
A small software consulting company with 15 employees wants to offer a 401(k) plan. Because the owners earn high salaries while some junior staff save very little, the company regularly fails annual ADP testing. By using the model Safe Harbor language from Publication 6087, the employer amends its plan to provide an automatic 3% company contribution to every worker. This exempts the company from annual testing and lets the owners maximize their own personal retirement savings.
Scenario 2: Setting Up an Auto-Enrollment Program
A retail chain wants to boost retirement participation among store clerks. Using the Eligible Automatic Contribution Arrangement (EACA) text in Publication 6087, the company drafts an adoption agreement that starts new employees at a 4% deferral rate. The document clearly defines the required annual employee notice and outlines the process for workers to opt out within 90 days if they prefer immediate cash pay.
How This Publication Relates to Specific Forms
Publication 6087 works directly alongside several major IRS forms used to establish and report retirement plans:
| IRS Form | Form Name | How It Connects to Publication 6087 |
|---|---|---|
| Form 4461 | Application for Approval of Pre-Approved Defined Contribution Plan | Document providers submit this form to the IRS alongside plan language drafted from Publication 6087 to obtain formal approval. |
| Form 5300 | Application for Determination for Employee Benefit Plan | Used by employers who design custom, standalone retirement plans to prove their plan terms match the legal standards in the LRM. |
| Form 5500 | Annual Return/Report of Employee Benefit Plan | The yearly financial report filed by employers confirming the plan is operating according to its approved written terms. |
| Form 1099-R | Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans | Reports participant distributions, rollovers, and corrections of excess deferrals handled under Publication 6087 guidelines. |
Common Misunderstandings Clarified
- Misunderstanding 1: Individuals must file Publication 6087 with their tax return. This publication is an informational reference package for plan drafters, not an individual tax form or schedule. Taxpayers never file it.
- Misunderstanding 2: Every employer must write their own custom plan language. Most businesses purchase pre-approved plans from payroll or brokerage providers who have already incorporated Publication 6087 language.
- Misunderstanding 3: Safe Harbor contributions can be taken back by the company. Publication 6087 makes it clear that required Safe Harbor contributions are immediately 100% vested, meaning the money belongs to the employee right away.
Why This Publication Matters for Taxpayers
Even if you never read the legal text of Publication 6087, its rules protect your hard-earned money every day. It ensures your employer calculates matching contributions fairly and keeps your retirement assets in an independent, protected trust.
Furthermore, this guidance preserves the tax-qualified status of the entire plan. If a plan document fails to include these required provisions, the IRS can disqualify the plan, resulting in immediate taxation of all employee balances and loss of tax deductions for the business.
Frequently Asked Questions
What does “LRM” stand for in Publication 6087?
LRM stands for “Listing of Required Modifications.” It is the term the IRS uses for official sample language packages that show how retirement plan documents must be written.
What is the difference between Publication 6087 and Publication 6088?
Publication 6087 deals specifically with Cash or Deferred Arrangements (CODAs), covering employee deferrals and 401(k) features. Publication 6088 covers general defined contribution plan rules, such as employer profit-sharing contributions, general vesting, and trust administration.
What happens if a company misses the December 31, 2026 plan amendment deadline?
If an employer fails to amend its retirement plan documents by the required deadline, the plan falls out of compliance. Employers must then use IRS correction programs, such as the Employee Plans Compliance Resolution System (EPCRS), to fix the defect and pay administrative fees.
Can an employee use Publication 6087 to dispute plan rules?
Yes. If you believe your employer has applied unfair vesting rules or improperly calculated deferrals, reviewing the standards in Publication 6087 can help you understand whether the plan follows IRS standards.
Conclusion
IRS Publication 6087 may look like technical legal reading, but it is one of the most critical documents supporting the American retirement system. It provides clear, standardized wording that ensures 401(k) plans remain secure, fair, and legally compliant.
With major compliance milestones such as the December 31, 2026 SECURE 2.0 amendment deadline in focus, Publication 6087 serves as the definitive reference point for employers and plan administrators looking to protect their employees’ financial future.
