Many Americans leave their 401(k)s behind when they change jobs, at least temporarily. The key advantage of this is that their 401(k) savings remain invested in a tax-deferred account, and there’s no effort involved.
Ultimately, though, most people don’t like the idea of having their money tied to their old employer for too long. It’s much easier to lose track of what fees are being charged and what our money is invested in if it’s in an old 401(k) account that we rarely check. There’s also a risk that your old employer initiates what’s known as a forced rollover to an IRA provider of their choice. This usually happens for small accounts under a certain size (usually less than $5,000). Your old employer might also choose to switch 401(k) providers, which means your money gets moved to a new institution with different fees and investment options — without your input.