How much could the IRS make if they audited everyone's 401K and IRA's
My guess is a lot since many people who self direct their retirement funds have tapped them many times with some wiping them out without paying the taxes and penalties. They think that they might be able to replace them or defer reporting what they spent until after they're eligible to withdraw it. I think the government knows this and that's one of the reason they want to see what you really have vs what you say you have.
Better yet. How about an indepth investigation of the personal, criminal and financial behavior of all congressmen? How do congressmen become milionaires by the end of their second term? True a few are rich before they get there, then become filthy rich.
Any withdrawals from 401ks and IRAs are reported to the IRS yearly. If you are under 59 and 1/2 years old and not taking substantially equal partial payments under rule 72t your financial institution must withhold and send to the government a 10% penalty. And you must pay income tax on the total withdrawal amount. You can try to play dumb and claim you forgot but the IRS doesn't care about any excuses. This is a classic example of how difficult and complicated the income tax code is for the average citizen and why income taxes should be ended and replaced with a "Fair Tax".