it doesn't work like that.
Let's say Box 1 = $20,000 and Box 2 = $2,000 and box 3 = $18,000.
As you simply withdrew the $20,000 and kept it, as your grandchildren didn't go to college, you should see income of $2,000 on your return; Box 2 only. There will be a 10% penalty for taking money out that was not for college.
where do you see it entered $20,000 as part of gross income? what form and what line?
