IRS tracking Roths

I’m 63, opened a ROTH IRA in 2012, have put in only money directly from me, no rollover or conversion or mixing with any other money. I got a copy of form 5498 from Vanguard, original to IRS. The form records the amount of my contribution, and accumulated growth during 2012. Why does the IRS track money which did not affect my taxes for 2012, and – supposedly – will never in the future either? Am I being paranoid?

SAVAGE SAYS: In light of what we’ve recently learned about the IRS, you can’t be too paranoid!? But there are several reasons the IRS might have an interest in tracking your Roth contributions, and the growth of them. First, they determine that you are eligible to contribute to a Roth (based on having earned income at a certain level). Second, if you withdraw earnings (not contributions) before 5 years, you would have a taxable event. So those are legitimate reasons, but I know you are thinking that one day, just maybe, they will change their mind about taxing Roth withdrawal!? Remember, they said they’d never tax Social Security benefits!!!