If the annuity is an IRA annuity, it was funded by IRA dollars without any regard to your basis in nondeductible traditional IRA contributions. The basis in nondeductible traditional IRA contributions only comes into play when your receive and report distributions from your IRAs. When you have basis in nondeductible traditional IRA contributions, the nontaxable and taxable amounts of the distributions from your traditional IRAs, including IRA annuities, are determined on Form 8606 as explained earlier.
