Thank you for your helpful response. However, I have reason to believe they may make a similar contribution again in 2017. So if they recharacterize they 12/28/2016 contribution to 2017, then they might not make the contribution later in 2017 that they otherwise would have. In this case, I would be better off accepting the penalty for 2016 and not doing anything that might jeopardize a subsequent employer contribution in 2017. Half a loaf (more like 3/4) is better than none.
