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For my 2007 Roth IRA contribution, I'm considering rolling over a SEP I started a few years ago.

Sorry, but you can't 'rollover' a SEP IRA into a Roth as a 'contribution'. Here are your options:

1) Convert the SEP IRA to a Roth IRA
- This does not count as a contribution to your Roth, so you can still make a contribution in addition to the coversion.
- You would have to pay tax (both federal and state) at your marginal rate; if funds from the SEP IRA are used to pay the tax, you would have to pay the 10% penalty for federal taxes, plus any penalty imposed by your state, on the funds used to pay the tax.
- Only restriction on earned income for a conversion is that you must make less than $100k MAGI; no minimum earned income is necessary
- You must not be married, filing singly for that year

2) Cash out the SEP IRA and use the proceeds to make a Roth contribution
- You would have to pay income tax (federal and state) and the 10% federal penalty, plus any state-imposed penalty, on the cashed out amount - due no later than April 15, 2008; or if you make estimated tax payments, due for the quarter you cashed the IRA out (state payment deadlines may vary).
- You could then use the money from the cashed out SEP IRA to make a Roth contribution, assuming that you meet both the minimum earned income requirement (you cannot contribute more than your earned income) and the maximum MAGI ($84k - $99k for Single; $154k - $164k for MFJ).

See Publication 590 for more details:

In general, it will cost you less in taxes to do a conversion rather than cashing out the SEP and then re-contributing it.

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