My firm expects to switch from a SARSEP to a simple 401K. What are my options for my SARSEP funds? Do I have to transfer them to the 401K?

Since the assets in the SARSEP is yours to do with as you please, you are not required to rollover or transfer the balance into any new plan your employer adopts.

Since your employer is adopting a SIMPLE 401(k), this may not even be an option, given that SIMPLE 401(k) plans are not allowed to accept assets from any other plan, including another SIMPLE 401(k) plans.

Your options would be to allow the assets to remain in the SARSEP account or transfer the balance to a regular traditional IRA…the latter makes sense only if there is a good reason to do so, such a paying less fees. Some Custodians will charge higher annual maintenance fee for a SARSEP than they do for a regular traditional IRA