A 529 plan can only have one beneficiary. If you use some of the money for your 2nd child, that is a non qualified distribution and subject to tax and penalty.
If you want to use the money for the other child, you first have to open a new 529 account and then rollover some of the money. The 529 plan administrator can show you how to do that. Then, take a distribution.
Yes, it's a bunch of hoops to jump thru, but that's the rules.
