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Aaaaaaaaaaand get ready for a tsunami of questions on match and non-elective contributions as Roth....

Just taking a stab at this without looking it up or thinking too hard...I think what you have, essentially, is an overcontribution. I think the rules for a SIMPLE would be the same as a regular IRA, i.e. you can take it out before April 15 without penalty. After April 15, there is a 6% (??) penalty. So that's where he is now, and 6% per year thereafter. That beats having the whole thing taxed. The other stuff about not enrolling employees is a different matter. Just trying to get the ball rolling and see if anyone corrects me or otherwise picks it up.