Common Mistake #24: Forgetting an Old Account (And Letting Cash Sit Idle)

Over time, many investors accumulate multiple financial accounts - old 401(k)s from previous employers, legacy brokerage accounts, or retirement plans that are no longer actively monitored. In many cases, these accounts remain invested and continue to compound quietly. In others, however, investments are sold, reallocated, or shifted into cash without the investor noticing.

According to plan disclosures and common custodial practices at broker-dealers and investment firms, uninvested cash can accumulate in accounts when default cash-management options are applied or when investors do not respond to required communications about how their cash should be handled. In many cases, money that was intended for long-term growth may remain idle in a brokerage account for months or even years if investors do not actively direct it into an investment or a different cash management program, reflecting how procedural defaults and inactivity can leave cash unused rather than working for the investor. This article explains why forgotten accounts with uninvested cash are a common but costly oversight, how it happens, and why even small balances can matter over time.

Key takeaways

• Forgotten accounts can quietly shift from invested to idle.
• Uninvested cash inside retirement accounts creates long-term opportunity cost.
• Small balances left untouched can compound into meaningful gaps.
• Administrative changes can trigger unintended cash positions.
• Periodic visibility matters more than constant activity.

Why old accounts fade into the background

Once an account is no longer tied to current employment or active decision-making, it tends to lose urgency. Statements arrive less frequently, logins are forgotten, and balances feel "handled" simply because the account exists.

This is especially true for retirement accounts. Because the time horizon is long and withdrawals are distant, it can feel safe to leave old plans untouched. Many investors assume that whatever is inside will continue to function as it always has.

At this stage, inaction feels neutral.

Where the assumption breaks

The issue is not neglect-it is structural drift.

Old accounts can change without explicit instructions. Investment options may be replaced or liquidated. Target-date funds can be mapped into new defaults. Required notices about fund closures or policy updates may go unread. In some cases, investments are sold, and the proceeds are moved into cash if no response is received.

When this happens, the account still exists, and the balance may appear stable - but the capital is no longer working.

This is where the logic breaks: "set and forget" only works if nothing changes underneath.

How idle cash quietly alters long-term outcomes

Inside a retirement or brokerage account, idle cash does not trigger alarms. Balances remain intact. There is no visible loss. Yet the absence of growth compounds over time.

Even relatively small amounts of uninvested cash can have an outsized effect when left untouched for years. What begins as a minor administrative shift can turn into a meaningful shortfall simply because compounding never occurred.

The consequence is not dramatic. It is cumulative.

This is how forgotten cash positions become costly-not through bad decisions, but through prolonged inactivity.

Why this often goes undetected

Dormant accounts generate little friction. They do not require ongoing contributions or withdrawals, and they rarely prompt action unless a problem surfaces.

There is also a false sense of safety around retirement accounts. Because withdrawals are restricted or penalized, investors may assume the account is "locked in" and therefore stable. In reality, stability of access does not guarantee stability of allocation.

Without periodic review, idle cash can persist indefinitely.

A more durable way to think about old accounts

Investors who avoid this mistake tend to adopt a simple framing:

Every account needs periodic visibility, even if it doesn’t need frequent changes.

This does not imply constant monitoring or active trading. It means confirming that the account is still invested as intended and that administrative changes have not altered its role.

The goal is continuity, not optimization. A brief check can prevent years of unintended inactivity.

When leaving an account alone may still beintentional

There are cases where leaving an old account untouched makes sense, such as preserving specific plan features, maintaining diversification, or avoiding unnecessary complexity.

The distinction lies in awareness.

An account left alone by choice is different from one left alone by accident. Forgetting becomes a mistake only when it allows cash to sit idle without purpose.

Old accounts work best when they are remembered, even if they are rarely changed.