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Barbara Whelehan writes Boomer Bucks for Bankrate.comRetirement-plan distribution land mines

You've built up a nice nest egg and are closing in on the date when you plan to retire. You have a lot of decisions to make about your retirement plan accounts. For example, should you roll over money from your 401(k) plan into an IRA? To figure that out, all you need to do is call up your financial adviser, who will know exactly what to do, right?

Not necessarily. The rules for retirement-plan distributions are so complex that even full-time financial professionals often botch things up for their clients, says CPA Ed Slott, who gives education seminars on IRA-distribution planning and estate planning to financial advisers.

Sometimes the botch occurs during the rollover process -- which can happen if you don't do a "direct rollover," also known as a trustee-to-trustee transfer -- and instead take a distribution and miss the 60-day deadline to move the assets into another retirement account. In these circumstances, plan assets are also subject to 20-percent mandatory withholding for tax purposes. So if you don't happen to have extra money to cover the amount withheld, you're trapped.

Slott lives by a few important rules: Don't cook bacon when you're naked. Don't get into fights with ugly people (because they have nothing to lose). And don't give money to Uncle Sam before you have to. "Everybody knows that to build real wealth, the key is to keep your money from the government, away from being taxed, for as long as possible."

That means you need to know where the land mines are buried with respect to retirement plans. The land mines, it turns out, are all over the place. Here's a road map that outlines where a few of the biggest ones are -- those that can cause your nest egg to blow up in one bad move.

Company stock in your 401(k) plan
If you own a lot of employer securities in your retirement plan, you may be eligible for a huge tax break. It's called "net unrealized appreciation," or NUA, and it applies only to company stock. Top executives and employees who have worked for a company for many years can greatly benefit by following these steps -- or, conversely, lose out by making missteps.

To qualify, you must be eligible to take a lump-sum distribution from the plan, and all the plan assets must vacate the plan within one calendar year. The 20-percent mandatory withholding imposed on plans does not apply to NUA.

Here's what happens: In your imaginary account you have $1.5 million in assets, with two-thirds of that in company stock. (It's never a good idea to have too much of your nest egg in company stock, but let this ride for illustration purposes.) You do a trustee-to-trustee transfer of the $500,000 that you have in mutual funds into a direct-rollover IRA.

Meanwhile, the shares of company stock should be transferred to a taxable brokerage account. "Don't sell the shares in the plan (first), because that negates the benefit," says Slott.

Next: "Can you fog a mirror? That counts."
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