IRS Publication 6087 – IRS Forms, Instructions, Pubs 2026 – In the ever-evolving landscape of retirement planning, staying compliant with IRS regulations is crucial for employers, plan sponsors, and financial advisors. One key resource for ensuring 401(k) plans meet federal standards is IRS Publication 6087, also known as the Cash or Deferred Arrangement (CODA) Listing of Required Modifications and Information Package (LRM). This document provides essential guidance on structuring CODAs—commonly referred to as 401(k) arrangements—to comply with Internal Revenue Code sections 401(k) and 401(m). Whether you’re drafting a new plan or updating an existing one, understanding Publication 6087 can help avoid costly penalties and ensure tax-advantaged benefits for employees.
As of 2026, this publication incorporates updates from major legislation like the SECURE 2.0 Act, making it a vital tool for navigating long-term part-time employee eligibility, catch-up contributions, and safe harbor provisions. In this SEO-optimized guide, we’ll break down what Publication 6087 covers, its purpose, key components, and how to apply it effectively.
What Is a Cash or Deferred Arrangement (CODA)?
A CODA is a feature within a defined contribution plan, such as a 401(k), that allows eligible employees to elect to defer a portion of their compensation into the plan instead of receiving it as cash. These elective deferrals can be pre-tax or Roth (after-tax), offering tax advantages like deferred taxation on growth or tax-free withdrawals in retirement.
CODAs must satisfy strict IRS rules to maintain qualified status, including nondiscrimination tests like the Actual Deferral Percentage (ADP) and Actual Contribution Percentage (ACP) tests. Failure to comply can result in plan disqualification, triggering taxes and penalties. Publication 6087 serves as a blueprint for incorporating these requirements into plan documents, especially for pre-approved plans under Revenue Procedure 2023-37.
Purpose of IRS Publication 6087
IRS Publication 6087 is designed to assist plan providers in drafting compliant CODA provisions. It includes sample language, definitions, and required modifications (LRMs) to ensure plans meet qualification standards. This package is particularly useful for:
- Pre-approved plans: Such as single plan documents, basic plans with adoption agreements, or combinations like money purchase and profit-sharing plans.
- Integration with other LRMs: It must be used alongside Defined Contribution (DC) LRMs to form a complete qualified plan.
- Compliance with recent laws: The latest version (updated March 2025) reflects amendments through the SECURE 2.0 Act of 2022, including changes to long-term part-time (LTPT) employee eligibility and Roth catch-up requirements.
The document emphasizes nondiscrimination, contribution limits, distribution rules, and special features like Safe Harbor designs, Eligible Automatic Contribution Arrangements (EACAs), and Qualified Automatic Contribution Arrangements (QACAs). It does not include language for emerging features like pension-linked emergency savings accounts (PLESAs), but providers can rely on proposed regulations for certain aspects.
Key Definitions in Publication 6087
Understanding the terminology is essential for applying the LRM. Below is a table summarizing core definitions from the publication, which help clarify plan operations and compliance:
| Term | Definition |
|---|---|
| Elective Deferrals | Employer contributions elected by employees in lieu of cash; includes pre-tax and Roth types; limited by Code §402(g) (e.g., $24,500 in 2026). |
| Highly Compensated Employee (HCE) | Employees meeting specific income or ownership thresholds; key for ADP/ACP tests. |
| Long-Term Part-Time Employee (LTPT) | Employees with 500+ hours in two consecutive 12-month periods (post-2020); eligible for deferrals after age 21. |
| Qualified Matching Contributions (QMACs) | Nonforfeitable matching contributions; distributable under elective deferral rules; can be Roth-designated. |
| Actual Deferral Percentage (ADP) | Test ensuring HCE deferrals don’t exceed NHCE levels by more than specified ratios (e.g., 1.25x or 2x). |
| Safe Harbor CODA | Designs that automatically pass ADP/ACP tests via minimum contributions or matches. |
| Catch-Up Contributions | Additional deferrals for age 50+ ($8,000 in 2026); super catch-ups for ages 60-63 ($11,250). |
These terms form the foundation for plan provisions, ensuring fairness and tax compliance.
Core Components and Required Modifications
Publication 6087 is structured into sections mirroring plan requirements, providing sample language for adoption agreements and plan documents. Key areas include:
1. Participation and Eligibility
- No more than one year of service (1,000 hours) and age 21 for general eligibility.
- LTPT rules: Eligibility after 500 hours in two periods; excludes certain employees like nonresident aliens.
- Automatic enrollment for new 401(k) plans post-2024: Defaults at 3-10%, escalating to 15% max (per SECURE 2.0).
2. Contribution Limits and Tests
- Elective deferrals capped at §402(g) limits ($24,500 in 2026, plus catch-ups).
- ADP/ACP tests: Options for prior or current year testing; includes QNECs/QMACs optionally.
- Excess distributions: Must occur within 12 months; formulas for income allocation.
3. Distributions and Vesting
- Hardship distributions: For immediate needs like medical expenses or disaster relief; relies on employee certification.
- Vesting: 3-year cliff or 2-6 year graded for matches; full vesting at normal retirement age.
- Special distributions: Qualified birth/adoption ($5,000), domestic abuse ($10,000 max), and emergency expenses ($1,000).
4. Special Arrangements
- Safe Harbor 401(k): Minimum 3% nonelective or matching formulas to bypass tests.
- QACA/EACA: Automatic enrollment with defaults (3-15%); 90-day withdrawal for EACAs.
- SIMPLE 401(k): For small employers; higher limits (110% for some post-2024).
The appendix includes redlined changes from the 2017 version, highlighting SECURE 2.0 impacts like Roth mandates for high-wage catch-ups (wages >$150,000 in 2026).
How to Use Publication 6087 for Plan Drafting?
Plan drafters should:
- Compare the CODA with DC LRMs for full compliance.
- Use sample language verbatim where possible to expedite IRS review.
- Incorporate adoption agreements for customizable options like testing methods or vesting schedules.
- Check for updates: The current version (03-2025) is available on the IRS website; monitor for 2026 notices on cost-of-living adjustments.
For nonstandardized plans, include provisions for ESOPs or money purchase integrations. Always consult IRS guidance like Notice 2024-3 for cumulative changes.
Recent Updates and 2026 Considerations
The publication reflects SECURE 2.0 enhancements, such as:
- Mandatory Roth catch-ups for high earners (effective 2026 transition).
- LTPT vesting disregards (optional pre-2021 service).
- Increased SIMPLE limits for small employers.
In 2026, contribution limits rise: Defined contribution max at $72,000, elective deferrals at $24,500. No major revisions to Publication 6087 are noted for 2026, but related notices (e.g., Notice 2026-13 on rollover explanations) may impact administration.
Conclusion: Why Publication 6087 Matters for Your 401(k) Plan
IRS Publication 6087 is an indispensable resource for maintaining compliant CODAs in 2026 and beyond. By following its LRMs, plan sponsors can ensure nondiscriminatory benefits, maximize tax advantages, and adapt to legislative changes like SECURE 2.0. Download the latest PDF from the IRS website and consult a tax professional for tailored advice. Staying informed not only protects your plan but also empowers employees to build secure retirements.