An employer set up a SIMPLE IRA. No elective deferrals were made to the plan. However, the employer did make the nonelective contribution he promised to make. Do you see any problem with this?

None. The 2 percent nonelective employer contribution is not dependent on elective contributions made by employees. There is no required minimum elective contribution/participation requirement in a SIMPLE-IRA; so long as the employees had the right to contribute under the terms of the plan.

Incidently, the employees are treated as "active participants" for 2002, even though the nonelective contribution may have been made after the end of the year.