Fornearly everyone, a 401(k) cashout is the worst DIY action to takewhen leaving a job.

With unemployment nearing historic lows, more career opportunityinevitably translates into greater job mobility. That means more401(k) participants will be changing jobs and will face importantdecisions on what to do with their retirement savings.

If you've changed, or plan to change jobs and must decide whatto do with your 401(k) at your former employer, the easiest choices– cashing out or leaving your funds behind – are typically yourworst options.

Conversely, perhaps the best choice – consolidation in your new401(k) – can be the most difficult, particularly if you opt to“do-it-yourself,” that is, DIY.

To avoid becoming a 401(k) DIY horror story, arm yourself withinformation and where available, seek expert education andassistance.

Horror story #1: Cashing out

For virtually everyone, a cashout is the worst DIY action thatyou can take.

Unfortunately, for most participants – particularly those withsmall 401(k) balances – it's also an easy and very tempting option,since it typically only requires completion of a simpledistribution form.

Pro tip: Avoid the cashout completely. Unlessyou're facing a true financial emergency, a cashout can wreak havocon your retirement goals. You'll end up paying taxes,penalties and lose the retirement income that could be generatedlater. To better understand the high cost of cashing out, use anonline cashout calculator.

Horror story #2: “Stranding” your 401(k) balance

Purely from a DIY perspective, leaving your 401(k) savingsstranded in your former employer's plan is very easy, since itrequires no action during the initial job change. However,leaving your 401(k) behind can still result in headaches and badoutcomes down the road:

• Managing multiple 401(k) accounts will require more time andyou'll likely pay more in fees.
• If your balance is below $5,000, you may eventually be forcedout of the plan via an automatic rollover into a safe harborIRA.
• If you fail to update your mailing address, you couldjoin the growing ranks of missing participants and you might:
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  1. Miss out on notifications about important plan changes (ex. –investment options, new recordkeepers, mergers/acquisitions or aplan termination).
  2. Fail to receive mailed distribution checks, or to take requiredminimum distributions (RMDs) starting at 70-1/2 years of age.
  3. Forget that you had an account at all.

Pro tip: If you leave your savings inyour former employer's plan, make certain that you keep youraddress current. Open and read plan disclosures and perform anannual investment “check-up.” Finally, if your savings are lessthan $5,000, stay alert for any correspondence indicating that youraccount is subject to being forced out of the plan.

Horror story #3: Attempting a DIY roll-In

Often, the best choice for many 401(k) participants is toconsolidate a previous-employer's 401(k) savings into an active401(k) with the current employer.

Consolidation can save you time and money by avoiding thepitfalls of having multiple retirement savings accounts. Fortunately, according to the Plan Sponsor Council of America's 60th AnnualSurvey, 93.6 percent of plans accept rollover contributions(“roll-ins”) from other qualified plans.

A DIY roll-in is the most-challenging DIY action a job-changingparticipant can attempt, by far. In this diagram [PDF], we've provided the intrepid DIYer with aflowchart to help navigate the roll-in process. Lots ofthings can go wrong during this process, including, but not limitedto the following:

Problems with paperwork:

• Submitting the wrong forms
• Having the forms lost in-transit
• The right paperwork arrives incomplete or “not in goodorder”

Resistance from the former recordkeeper:

• Unfamiliarity with roll-in requirements
• Burdensome documentation requirements

Completed paperwork and funding arriving on differentschedules

Pro tip: Inquire with yourcurrent-employer's HR department to determine if your new 401(k)plan accepts roll-ins. If they do, they can likely provideyou with additional information (forms, your new planrecordkeeper's contact information, etc.).

Fortunately for job-changing participants, more plans arebeginning to offer a facilitated roll-in service, which offersend-to-end assistance for participants rolling in their retirementsavings.

Ideally, this service should have consolidation specialists whounderstand how to get the roll-in done quickly and efficiently andare supported by workflow technology that streamlines theprocess.

Participants can avoid 401(k) DIY “horror stories” withportability and consolidation programs that offer education andassistance to help in-transition participants move their retirementsavings forward, regardless of balance.

Some portability and consolidation programs have been proven toreduce cashouts by over 50%. Consider one with auto-portability,which automatically moves small-balance retirement savings forwardwhen participants change jobs.

Spencer Pringle is Executive Vice President,Retirement Solutions, for Retirement Clearinghouse (RCH), and is responsible formanaging the RCH Service Center, including the delivery of RCH'sparticipant education and assistance.