Been doing utility audits for 12 years now and starting to think about retirement planning. Most of us are independent contractors or small firms. Anyone set up a SEP-IRA or solo 401k? What works best for variable income?
Retirement planning for auditors?
I went with a SEP-IRA through Vanguard. Can contribute up to 25% of income and it's easy to manage. In good audit years I max it out, lean years I contribute less. Very flexible.
Solo 401k through Fidelity here. Higher contribution limits if you have a really good year. I can put away up to $52,000 annually between employee and employer contributions.
Don't forget about estimated quarterly taxes. I learned the hard way - big refund check from Tennessee Valley Authority and Uncle Sam wanted his cut immediately. Set aside 30% of every check now.
Good point Michelle. I use a separate savings account for taxes. Every audit payment gets 30% moved immediately to tax savings. Makes April much less painful.
Started late but doing catch-up contributions now that I'm over 50. Extra $6,000 per year helps. Wish I'd started this conversation 10 years ago when I was Derek's age!