Balk Ruling

[Baseball_North]

Had this come up in a game that I was playing in.

R1, R2, 2 outs.

Pitcher fails to come "set"; BU says "that's a balk". F1 pitches, and the batter hits the ball to F4, who throws to F3 on a normal ground out.

I know the ball is not dead on a balk immediately, but what is the ruling on this? The umpires moved both runners up one base, and put BR back at bat. They said that it is not a dead ball, but if every runner doesn't advance at least 1 base, then the balk is enforced as if nothing happened.