Box 1 is the amount received. Box 2 is the taxable amount. Therefore, if the boxes match, it is all taxable. So, if the company said that you are receiving interest earned until you reach the cost basis, it would be taxable withdrawals until then.
The cost basis does not change. The amount originally paid for the annuity does not change. Only the value and the earnings will change.
Since you have filed with the 1099-R as it came and are ignoring the general rule for the reasons you listed, you have a working game plan. Enjoy the year!
@MtnTABS
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