An increase of $4,000 in tax liability for an taxable distribution of $18,000 is well within the realm of possibility and might even be considered to be highly likely. $4,000 is only 22% of $18,000 and 22% is one of the tax brackets that many people find their last dollars of income to fall in. Even those whose additional income might not fall in the 22% tax bracket can find their marginal tax rate to be substantially higher than their tax-bracket rate due to the effects of increasing AGI, such as potentially increasing the amount of Social Security income that is taxable.
Your periodic distributions received as an annuity/pension are not eligible for rollover, so you are not permitted to report them as having been rolled over.
