Company acquistion with a SEP

[cpc0506]

Client is buying a company. The company will become a wholly owned subsidiary of the client after the acquistion.

Client currently has 401k plan. It is a calendar year plan.

The company it is acquiring has a SEP (also a calendar year plan).

Client wants to make the purchase effective December 22, 2010. What does this mean with regards to the status of the two plans? Can the client have both a 401k plan and a SEP plan in the same year?

Should the SEP be terminated prior to the acquistion?

This may be beyond the scope of this forum but the client just called yesterday and thought they better check with us (at least they did it ahead of time and not after the effect.)

Any guidance out there? I could not find anything in the ERISA outline book.