Asset location is about which account holds which investment. Before that question comes a simpler one: is the money in the account invested at all?

$19.2T In IRAs at the end of 2025, more than in all workplace plans combined.
28% Of one year's IRA rollovers still in cash seven years later, in Vanguard's data.
55% Of new workplace-plan contributions still in cash after twelve months, from the same research.

How this happens

A 401(k) balance rolls into an IRA when someone changes jobs. The plan’s target-date fund does not come along; the money arrives as cash in a new account, and the new account has no default investment. Nothing prompts a decision, so for a large share of people no decision gets made. The plan side has the same problem in miniature: a contribution lands in cash and waits for an election that never comes.

The cost is not a tax cost. It is the whole return of whatever the money would have earned, for as long as it sits.

What it says about “under-managed” retirement money

Three different things get called under-managed, and they need different fixes. Idle cash is a default problem: the fix is an instruction to the custodian, made once. Backwards location, the subject of this topic, is a household-level problem that an investor can fix alone at the next rebalance. A lack of active management inside the plan is a third thing, and the plan menu, not the participant, decides it: about 40% of plans offer a brokerage window and about 2.4% of participants use one.

Only the first two are things a reader of this site can do something about this month.