Can a 1099 payment be classified as W-2?

[Jakyasar]

A client paid their children 1099 i/o w-2 at the suggestion of their CPA, this is for 2025. The children received W-2 for 2024 and at least one them were eligible to participate in the pension plans.

I am told to accept 1099 as w-2 (which is the compensation definition in the plan document).

How can I accept this, makes no sense?

Here is the definition from basic plan document. Checked all the code etc and no reference to any 1099 equivalency.

"W-2 Compensation" means wages, within the meaning of Code section 3401(a), and all other payments of compensation to an Employee by the Employer (in the course of the Employer's trade or business) for which the Employer is required to furnish the Employee a written statement under Code sections 6041(d), 6051(a)(3), and 6052. W-2 Compensation shall be determined without regard to any rules under Code section 3401(a) that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Code section 3401(a)(2))."

Anything I am missing?

[Peter Gulia]

I doubt you’re missing the essence.

Assuming the employer or service recipient and the retirement plan’s administrator are, in essence, one person (whether a business organization or a human), and assuming the worker’s parent controls the business:

Was the worker old enough that she could have made a nonvoidable contract? (Under most States’ laws, 18.)

Even if old enough, is it believable that the worker was not subject to the service recipient’s control for the work done?

Was the work done of a kind that would be done by nonemployees for a business of the kind the service recipient does?

If the plan’s administrator interprets the plan’s governing document to treat a worker tax-reported as a nonemployee as an employee and to treat her nonemployee compensation as an employee’s wages, what is the administrator’s reasoning for that interpretation?

Has anyone advised the employer/administrator about tax law’s duties of consistency?

If your client tells you it has considered carefully and accepts all risks involved, how confident are you that you would not be seen to be involved in a breach or violation?

Might it be effective to suggest to the certified public accountant—quietly, out of the view and hearing of your client—that the CPA reconsider one’s advice? And consider whether a Form 1099-MISC report was mistaken and should be undone and corrected with a Form W-2 report?

This is not advice to anyone.