GA pilot reported becoming distracted and receiving a low altitude alert from ATC.

Narrative

The aircraft was being ferried to ZZZ1 from ZZZ after being in maintenance for some time. The route was to fly to ZZZZ then to ZZZ1. Weather in ZZZ was marginal VFR with excellent VFR weather in ZZZZ. Getting my weather briefing from Foreflight; I filed an IFR flight plan. After a thorough pre-flight I determined the aircraft was airworthy and computed my weight and balance and takeoff data. The departure off runway XX called for a climb of 405 ft per nautical mile to 800 ft. Both the performance app and aircraft flight manual confirmed at my weight the aircraft would meet the departure criteria. All before and after start checklist were completed. The Garmin 1000 was configured to fly the departure utilizing the GPS in NAV mode and speed being set for best rate of climb. The takeoff was normal; with the aircraft accelerating I reached down to pull the gear handle up to retract the gear. The gear retract mechanism is between the seats on a pedestal requiring you to use your right hand and reach down. I engaged the autopilot at 400 ft and retracted the flaps which moved slightly but did not retract. I observed the circuit breaker was popped and looked down to reset it; however during the maintenance apparently the power lever friction knob was completely in the loose or non friction position therefore when I took my hand off the power lever it retarded to flight idle. My initial thought was a engine roll back and the aircraft began to lose altitude. I disconnected the autopilot and applied maximum take off power. The engine being a Pratt and Whitney was slow to respond and I lost several hundred feet during the event prompting a low altitude alert. Departure advised a low altitude alert and told me to climb immediately. With high terrain ahead I deviated to the left where Approach gave me a radar heading. The remainder of the flight was uneventful.