Company with SIMPLE IRA bought by Company with 401k

Client currently has a 401k plan. It has just acquired a company with a SIMPLE IRA. It is my understanding that SIMPLE IRA's cannot be terminated during the year. However, is this still the case if the company is sold? Does the new company have to allow the employees to continue their contributions to the SIMPLE IRA? And so they continue the acquired company's employer contribution?

Current 401k plan has a 1 year eligibility requirement.Not sure if original hire dates are being kept so employees under the acquired company may or may not be eligible for the 401k yet.

May want to search under the SIMPLE topics as I know there have been a few threads recently on this same issue that generated some comments.

My wild guess is that the answer might change if it was a stock sale or asset sale?  If asset sale and buyer did not assume the SIMPLE, then the seller is still sponsoring the plan, but it may not have any employees left, so it may be able to terminate the plan depending on whether it still has employees participating in the plan.  If stock sale, then my understanding is that it cannot be terminated mid-year and acquired company employees are permitted to continue to contribute to the SIMPLE.  There is a 2 year transition period related to the business transaction as well. 

...or you can disregard my wild guess and follow EBECatty suggestion

I have been through this several times and agree with Madison71.

The company that is being bought is changing their EIN. Their accountant's have told them that because of the change in the EIN, the Simple Plan is automatically terminated.

Is there any truth to this?

I haven't found out whether it's a stock or asset sale yet.

There is no truth to that, coleboy.

As the EIN of the purchased company is being changed, my guess is that this was a stock sale and the purchaser is changing the EIN.  If it was a stock sale, then the purchaser has assumed the SIMPLE plan and must maintain it until the end of the year.  The employees of the acquired company will continue to participate in the SIMPLE and the purchaser must fund the necessary employer contribution until year-end .  At that time, the SIMPLE may be terminated and the employees of the acquired business will be eligible for the purchasing company's plan based on the eligibility requirements of that plan.  The acquired employees cannot participate in the both the SIMPLE and the purchasing company's plan.  Only the employees of the acquired company may participate in the SIMPLE and the termination can only be done as of 12/31.

Thank you ACK!