If the box on the 1099-Q that states "Check if the recipient is not designated beneficiary" is checked sometimes the IRS' computers calculate a deficiency and automatically assess penalties and interest to the account holder (you). Since you have designated the distribution to the Beneficiary you should not have any issues. The best way to avoid all issues is to have the distribution paid directly to the school. This will also protect the Beneficiary by keeping the super-duper computers at the IRS at bay.
