Q. Would it be worth it to attach a note as per my earlier message to clarify to the IRS?
A. No.
Since you are not the recipient, the IRS is not looking for it to be reported on your tax return.
Just because he is your dependent, does not mean that he does not have to file a tax return. A dependent's income cannot go on the parent's tax return*. If he has enough income, including a taxable portion of an ESA (or 529) distribution, he has to file a tax return of his own.
But, since this was a direct transfer/rollover, none of it is taxable and it does not have to be reported, at all. If you tried to prepare a tax return for him, you would end up with a form 1040 with all blanks (assuming he has no other income). It can't be e-filed and mailing it in would raise a bigger red flag than doing nothing. TurboTax will enter nothing about the 1099-Q on the actual tax forms. Nothing is sent to the IRS about his 1099-Q, when it's not taxable.
*There are some minor exceptions, but this isn't one of them.
