The pros? You don’t have to do anything! Also, possibly it’s a really great plan (low expenses, broadly diversified investment choices, good customer service and website interface). A lot of big tech companies’ 401(k)s are like this.
Also, 401(k)s can provide benefits that IRAs don’t, like higher protection against lawsuits.
Cons? If it was a “meh” kind of plan, leaving it there keeps your money in a “meh” place. And you’ll want to check with your former employer’s HR to see if you’ll be restricted in any way now that you’re a former employee. Does your access to the website or customer service change? Are you charged more fees now that you’re no longer an employee?
Also, you now have to keep track of one. more. account. One more account you have to manage investments in, manage paperwork for, set beneficiaries for, etc. This might not seem like that big of a deal when you have only one old 401(k) or when there’s not much going on in the rest of your life. But as life goes on and you start collecting a trail of 401(k)s from all former employers and you’re got career and family and health and friend demands on your time and energy…simplifying your financial life is gonna get real important, real quick.
Lastly, you might not be allowed to leave it there. Maybe your old employer gets acquired or goes out of business or changes the 401(k) providers. If the balance is too low (< $1000), they can just cash it out and send you a check. With balances under $5000, they might forcibly roll it into an IRA. Not ideal!
My “favorite” story about a client who didn’t roll a 401(k) over when he left his job: He didn’t just leave it there for a little bit, he left it there for over 10 years, during which time the company went through some changes, and the 401(k) plan provider changed…twice? I think. He had a vague notion that he had money in this 401(k) but didn’t have many details. We eventually tracked it down…to the state’s unclaimed property division! It is proving challenging to extract it.
