What is the proper way to handle soldiers (junior enlisted) addressing each other as Sergeant Major?

I'm not sure I see the problem here. When I was one of a few hundred LTs going through the Infantry Officer Basic Course at Ft Benning, the guy who showed up with the roach coach for lunch (most likely himself a retired senior NCO) would call every LT "general" and any NCO "Sergeant Major". It was just a joke. When I got to my first unit, officers and soldiers alike would sometimes joke or tease each other (their peers, not officer to soldiers) by referring to them as a higher rank. Usually it was done if a guy was talking like he had all the answers to the Army's problems, or somehow acting above his grade, or whatever. But no one ever took it as being disrespectful to the real SGMs or Generals.

Is that the type of peer to peer joking you are trying to stop, or are you saying the soldiers do it as part of the work day, like saying "SGM Smith, come here" ? That would need to be stopped with a simple "knock it off". But if they are just kidding around with each other informally, who cares? IMO trying to cite regulations for something like this is pole vaulting over a sidewalk crack.

SSG (Join to see) , As others have stated, put a stop to it in a professional manner. With that said, I'd find out why they are doing it. At one time, way long ago in my first permanent party unit after Basic and AIT there was a fellow Soldier in my Cohort who's name started with Top....and was 5 syllables in total length. All the members of the Cohort called him Top - much to the consternation of the other members of our platoon until they got to know us, and then called him that too. It turned heads a lot of times, got some of us smoked on occasion, but we never did it out of respect to the 1SG. Same with the other member of our Cohort with the last name Major...who made SGT a few years later and we THEN took particular joy in shouting at SGT Major to get over here or to go report to 1SG, or whatever else. Rank/Name combos can sometimes lend themselves to all kinds of headaches and entertainment. Oh some of the combos I've seen over the years, LOL.

It was common when I was a private (2007ish) that my CSM would call soldiers "Sergeant Major in-training". Granted, adding the "in-training" definitely makes a difference. My point is, I think it really depends upon the intent. Is the purpose to build comradery and motivate, or it is intended as disrespect to those who earned the rank of SGM or CSM?

If it is intended as disrespect, I would treat it as such. If not, I do not see a problem.

We often made up rank names in response to NCO's giving sub names for rank. "senior specialist". You were called a senior specialist but in all actuality you're just a specialist, period. We called ourselves command specialist majors etc. One thing that stuck out from one of the NCO's I looked up to was he would address us as the next rank. When I was SPC he called me SGT but he also treated me as such giving me leadership roles.

Nip it in the bud right now...goes to good order and discipline no matter the context.

It must be a "New Army"
Shanigans if I did that I was smoked all day. When I first came back from AIT i accidentally called my PSG Sir and that was the last time I called him that.

Has everyone forgotten how we talked amongst our buddies when we were PFCs? Calling each other by strange ranks when they think the adults aren't listening is probably some of the LEAST offensive garbage coming out of their mouths. If they get casual enough to vocalize it in public, a simple "Cut that shit out!" is usually enough to solve most minor issues (unless you've already lost their respect). Overreacting and over punishing can quickly turn your happy and motivated Lance Colonels and Lt Corporals into unmotivated malcontents who you can no longer trust with your back turned. Nothing makes the job of an NCO easier than having motivated troops who don't constantly need to be watched. Ruin that at your peril... and if you're so concerned about "microagressions" against generalized pay grades when they think you're not listening that you make them present research to the platoon about it, they'll likely be more careful about being overheard, but most of the platoon will consider you an oversensitive douchenozzle and laugh even harder when that same PFC imitates what you would sound like if you were working the street as a tranny hooker.

I can't believe this is really a topic of conversation. You are an NCO, step up and have a talk with these Soldiers, if you don't like how they are acting. Seems like everyone else has sand in their ass crack, bringing up UCMJ or other non-judicial punishments.... Oh the those of you with the "back in MY day" comments, things have changed. Get over it.

Article 134 of UCMJ covers impersonating a commissioned, warrant, or noncommissioned officer.

http://usmilitary.about.com/library/milinfo/mcm/bl134-26.htm

Act like an NCO and be judicial in determining if they are just popping off and ‘Relaxing as in Jackson’.