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<<Are there any problems or downfalls rolling this 401K into my SEP-IRA? This would simplify things by having a single account. >>

The problem is if you might work for another employer in the future who offered you a 401k. If you keep the accounts separate, and the future 401k was worth moving into, you can move your old 401k into it. If you mingle youe old 401k with your SEP-IRA, you won't be able to move into a new 401k.
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