Due to the complexity of this situation over the past 18 years I am in agreement that I do not know what Statue of Limitations Rules might apply. I also know that the thought of Amending that many past Tax returns and the associated costs to do it with a Tax Professional can be excessive. The one Tax Professional I contacted about this said his rate was $400/hr
The reality is that even with all the excessive Contributions my Roth IRA has only made minimal profits due to some bad investments over all these years.
The associated costs and hassle to amend all my returns may cost as much as the penalties assessed. The amount of paperwork involved is mind boggling as I have researched this.
As I mentioned I am seriously considering just cashing out my entire Roth IRA and placing the proceeds into a CD or Money Market account and wait and see what happens with the IRS.
I would be happy to just pay a Penalty fee on the Profits made above the amount that I have contributed yearly for the last 18 years.
My thought is that If I cash out my entire Roth IRA that there would be no more yearly assessed Penalties since the money is no longer in my Roth account and I could then deal with any IRS issues after they flagged this.
1_Does anyone know what I might expect in the way of notification from the IRS after I cashed out my IRA?
Would they contact me by mail about the Penalties or assess Penalties on my next Tax Returns?
2_Is it reasonable to think that I might be able to negotiate a settlement with the IRS without still having to do all the associated paperwork after the fact of cashing out the Roth?
3_Can anyone see any potential problems with me just cashing out my Roth and taking the wait/see approach from the IRS?
4_Any further thoughts would be greatly appreciated
BTW_Thanks to All who have responded. While I blame my previous Tax Preparer for never spotting this I honestly never knew there were limitations based on Income and it amazes me that after all those years I never read anything that tipped me off to that fact. How that alluded me I will always question.
I just faithfully contributed the Max amount per year to my Roth thinking I was doing the right thing for my Retirement.
