Greetings Motherlvs:
Unfortunately, there is no clear guidance regarding tuition remission programs. Tuition remission is a moniker assigned by universities and states, but is not a defined term from a legislative standpoint. Right now it looks like these probably do not qualify for the penalty-free withdrawal exception within the framework of current rules. But as I said, it's not 100% clear, so you might want to seek the opinion of a tax professional. You can read more of the discussion in this thread.
On the bright side, you have a good problem! Worst case scenario you have to pay the additional 10% penalty on earnings by taking a non-qualified withdrawal if you don't change the beneficiary or otherwise continue to carry the plan forward. If you don't need the money, you'll probably want to sit on it until you do, or are in the lowest-possible tax bracket.
Good luck,
Brian Boswell
VP, Research & Development
This information does not constitute tax advice and is provided for informational purposes only. Please consult your tax advisor, financial advisor, local taxing authority, and/or plan provider or sponsor for more information.