Amendment of eligibility rules/entry dates

[chris]

Safe harbor 401(k) provides for eligibility rules age 21 and 1 year of service. Also provides for dual entry dates of Jan 1 and July 1 with entry date for a participant being the entry date coinciding with or next following the date the eligibility requirements were met. Employer hired new doc Oct. 2003. Employer wants to amend Plan to allow for new doc to enter plan as of July 1, 2004. In essence, eligibility requirement would have to be reduced to 6 mos. in order for new doc. to enter plan as of July 1, 2004 and thus be able to defer in 2004. Also, compensation taken into account would be for entire plan year and not just compensation from entry date. What issues are there with amending the service requirement retroactively, e.g., effective as of first day of 2004 plan year (Jan. 1)? Although potential discrimination issue in favor of highly compensated e/ee exists, wouldn't non-highly's also benefit by virtue of now being eligible for the 3% nonelective safe harbor contribution? Thanks for any input...