SEP IRA, WHAT ARE DIFFERENCES FROM TRADITIONAL IRA?

[fire2china]

I left a mega company and joined a small consulting firm last month, I was told I can set up a SEP IRA account with Vanguard, which alows me to put as much as 25% of my salary into it. all taxes(federal, state, local, social security, even medicare tax...) will be deferred... sounds too good to be true? In my old company, 401k only allows me to defer federal tax.

I have no plan to stay in this company for a long time, I am wondering if I can roll over SEP IRA to my traditional IRA when I am leaving that company. Do I have to pay state , social security taxes when I roll over it to a traditional IRA?

 

[eridanus]

Yes, you can do a SEP->traditional rollover. See the IRS chart below.

http://forums.kiplinger.com/showthread.php?t=3995

http://www.irs.ustreas.gov/pub/irs-tege/rollover_chart.pdf