I'm sure he is right then, he's basically the best expert we have on this. If you are not permitted to make a withdrawal of excess contributions because you met the last month rule at the time, then you aren't permitted, and you are stuck with the 10% tax in 2018. It's not excess for 2017 when considering your 2017 situation as of 12/31/17.
I wonder about stopping your 2018 contributions though. As it is, you are on track to contribute $3400 in 2017 and $1437.50 in 2018. That adds up to a $2550 excess at the end of 2018 due to the testing period. If you stopped your 2018 contributions immediately, you might end up only contributing $862.50 in 2018. That would mean that, overall, your excess is only $1975, and might reduce your penalty. (Some of the 2017 excess is absorbed by the allowable amount for 2018.)
That works for ordinary excess contributions although I'm not sure it works in this case.
