This inherited IRA must always be an inherited IRA. Even if it is transferred to a different custodian it remains an inherited IRA and it must be cleared out within 10 years.
Separately, the beneficiary may be able to reduce their tax benefit by making contributions to a new IRA but this would be treated as a separate transaction subject to the usual rules for contributing to a regular IRA, and the withdrawals from the inherited IRA will be taxed accordingly.
Depending on your nephews age, other income and the amount of the IRA, you may be do some intelligent timing of the withdrawals, but that’s all.
