The tax that was "taken out" (i.e. withheld) from your distribution is an advance payment towards the income tax that you have to pay on the distribution. The advance payment and the actual tax that you owe will be reconciled on your tax return. The tax on the annuity distribution is not calculated separately from your other income. The distribution will be included in the total income on your tax return, and the advance payment will be included in the total tax withheld.
