Not excluding but reduced benefits

[Rai401k]

Employer currently has 25 employees 3 are HCE's.

Employer Contributions consist of a 5% SH PS, 100% up to 5% match (stated), and a 5%

fixed PS (not discretionary).

They are in the process of hiring 18 people from a rival company. (plan has 2 month wait for elig. only)

The problem is that they don't want to exclude these employees from the plan they just don't want to give them all of the benefits which is probably harder to do. They only want to give them the 5% SH PS.

I know that we might not be able to amend the plan currently because it is a SH plan, but what options do we have?

We were told we can amend the plan for next yr to exclude these employees from the stated match and fixed PS but we don't think it will pass coverage.

We were looking to create a QSLOB for these employees but I beleive that there is a 50 employee min to create a qslob.

Any suggestions will help!