The best thing to do with an old retirement plan is also the easiest

“Sometimes people don’t read the forms, or they don’t trust financial institutions,” Hanson said.

Mistrust and mistakes aside, the problem here is that you’ll automatically have 20 percent withheld for federal income taxes.

Let’s say you have $100,000 in your 401(k) and you’d like to move it to a new employer’s plan. You’ll have 60 days to roll the money over, if it’s disbursed to you as a check. “But the check is for $80,000,” Hanson said. “So you have to come up with another $20,000 from somewhere.”

Another common mistake is withdrawing the money instead of keeping it in retirement savings.

The rationalization is that it’s no big deal, Hanson says. “Why don’t I just take that money out and buy some new furniture?”

But it is a big deal. “One, if it’s distributed in your working years, it’s like a bonus, and it’s taxed as if you made an extra $25,000,” Hanson said, or whatever the amount you have in the 401(k).

You will pay early withdrawal penalties, as well, if you are younger than 59½, and there is also the opportunity cost when you give up the compounding and income you’d earn if the money stayed in an account. “I view retirement dollars as sacred dollars to take care of your old age,” Hanson said.

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Start the process by telling both providers you want to do a trustee-to-trustee transfer. “It’s not as painful as calling the phone company or the cable company,” Hanson said.

You may have to spend some time on the phone while the provider walks you through the process. The transfer can be done electronically or via a check sent directly to the new 401(k) provider.

The check might be sent to you but won’t be made out to you. “That is the key,” Hanson said. “Find out from your new employer the name of the new provider. Then, you’ll have to forward the check.”

The easiest rollover of all happens when the same provider handles both plans and can do the transfer internally. Even between different companies, it’s generally straightforward, and you get the benefit of keeping your retirement savings in a retirement account.