What is the correct way to enter a 1099-Q for a QTP distribution when the recipient is *not* a dependent of the taxpayer?

I have a grandparent who established the 529 accounts, and takes the distributions and mails them to the colleges.  Each year he has gotten an audit for the distribution to his grandchildren, so I must be doing something wrong.

Lacerte throws a diag if I enter the name and SSN of the beneficiary.