Here's How to Avoid Sabotaging your 401(k) Plan

In addition, most 401(k) plans require workers who take a hardship withdrawal to suspend contributions for six months. During that period, you'll miss out on investment gains and the company match, which will further deplete the amount you'll have available when you retire.

5. Don't cash out. Once you leave your job, you can do whatever you want with your 401(k). But unless you roll it into an IRA, you'll have to pay taxes and penalties on any money you withdraw from your plan.

Workers who cash out their 401(k) plans risk reducing their retirement income by up to 67%, depending on the number of times they change jobs, according to an analysis by the Employee Benefit Research Institute.

Last year, 42% of employees who lost their jobs took a cash distribution from their 401(k) plans, according to Aon Hewitt. Younger workers were more likely to cash out than their older counterparts, particularly if they had a small balance in their plans.

Young workers who cash out their 401(k) plans are giving up their most valuable asset: time. "Investment compounding is sort of esoteric, but it's real," Hess says. "That little bit of money means a lot in 40 years."