Q. Is there some type of correction I need to obtain?
A. If you make a ,mistake, you have 60 days to put the money back to "undo" the non qualified distribution.
Q. Am I making too much out of this?
A. No. A mistake has been made and it is your mistake not Fidelity's.
See these discussions on similar problems. The posts were about timing rather than wrong beneficiary, but the dilemma is the same: you meet spirit and intent of the rules (you used the money for your kids education) just not the technicalities.
https://www.savingforcollege.com/article/timing-of-529-plan-distributions-must-match-qualified-expen...
https://ttlc.intuit.com/community/college-education/discussion/529-provider-distributed-funds-on-12-...
https://ttlc.intuit.com/community/college-education/discussion/i-took-a-529-distribution-in-2021-for...
