DO NOT CASH IT OUT unless you want to pay additional taxes plus the 10% penalty! Rollover IRA or assess the existing 401k's fund selection and invest there if they have something broad-market (close to index as you can get) that is also a low expense ratio and also if they're not charging you a service fee for no longer being an employee (this isn't common, but you should ask if you don't already know).
If you have no decent investment options within the existing 401k's plan, then convert it to a rollover IRA at someplace like Vanguard and you can invest it in anything, like their VTSAX (total market index fund). Moving it to another instituion like Vanguard may mean you're hit with a transfer or closing account fee (the small petty companies love doing this) but it would be worth the $50-150 to get the money out and working.
A rollover IRA is essentially a traditional IRA for all intents and purposes. So that means he could start contributing to it as a traditional IRA and possibly get credit for the contribution on your taxes (depending on your tax brackets/other 401k availability). but at the very least he'd be able to throw in $5,500/year and get it all invested and working for you.
And if he is self employed, he needs to check into a solo 401k to be able to maximize your saving/investing buckets.
