Retirement accounts' new safety net.

• Position: YOUR LIFE - Federal regulations regarding defined contribution retirement plans

Younger workers who frequently change jobs often undermine their own efforts to build retirement nest eggs by cashing out their qualified retirement account every time they switch employers. New Federal regulations may help them resist their own worst instincts, notes the Financial Planning Association, Denver.

Participants in a defined-contribution retirement plan like a 401(k) or 403(b) have several options when they leave their employer. They can instruct the employer to leave their funds in the plan if the plan allows that, roll the funds over into an individual retirement account or a new employer's plan, or ask for the funds in cash. Some plans mandate that, if the departing employee fails to provide instructions and the account is valued under $5,000, the plan must cash out the account and send a check to the participant.

Under Federal regulations that went into effect March 28, employers whose retirement plan mandates cashing out a small account when it does not receive instructions from the departing employee automatically must roll it directly into a default IRA on behalf of the employee if the account is worth $1,000 to $5,000. For accounts valued under $1,000, the employer still can cash out the account.

Studies show that workers with small...