The entire $21,164.62 is indeed considered to be income but only the $1,164.62 is taxable and only the $1,164,62 affects any other areas of your tax return.
Examine Form 1040 line 16b or Form 1040A line 12b to see that only the $1,164.62 is appearing on your tax return as being taxable. This will be the result if box 2a of your Form 1099-R shows only $1,164.62.
