Can .NET 4.0 code interoperate with .NET 2.0 code?

Are there compatibility barriers with a .NET 4.0 assembly calling code in a .NET 2.0 assembly? And vice versa?

More specifically, I'm investigating an upgrade to Visual Studio 2010 when using a third party application based on .NET 2.0. The application is extensible by hooks that reference my custom code. And vice versa, my code will reference the application's assemblies.