I'm unemployed, and I currently have three 401(k) plans from previous employers. Any advice on how to put all three of them together so I can keep better track of my investments? What should I do with them until I find employment again? -- Name withheld

Your best option is to roll your three 401(k) plans into one IRA (short for "individual retirement arrangement" or "individual retirement account"). "An IRA will almost always have better investment options than a 401(k)," says Gary Schatsky, president of Objectiveadvice.com, a New York City financial planning firm. "So by consolidating not only do you simplify but you'll also increase the quality to your investment choices." Schatsky suggests a mutual fund company such as Vanguard or a deep discount brokerage such as Charles Schwab or Ameritrade to give you access to a large selection of mutual funds and exchange-traded funds.

It's important, when you're retrieving funds from your old 401(k)s, that you request what is known as a "direct" transfer into your new IRA. This option means that the funds are made payable to your new account and go directly there. If the funds come to you directly, you could end up paying a big (and unnecessary) tax bill.

When consolidating your 401(k)s, MONEY's Walter Updegrave suggests opening up a new IRA rather than depositing the money into a previously existing IRA. The reason: When you get your next job with a 401(k) plan, you may want to take these funds and roll them into your new 401(k), if the plan permits. And it may be less of a hassle to do that if the funds haven't been commingled with other IRAs funded from other sources.

-- Judith Feldman

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