There is nothing for your son to report. As long as the distribution was spent toward qualified expenses of which, tuition, and room and board is, he doesn't have to do anything. Box 2 is of course earnings but because the money was used for qualified expenses, then it is not taxable. And you can still use your son as dependent and claim the deduction and he turn can still file his own tax return to get back any federal taxes withheld providing he does not claim his own personal exemption.
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