Sounds like the IRA held an annuity as an investment and the annuity had a surrender charge. I would expect that the surrender charge on the annuity would simply be a reduction in the value of the IRA, an investment loss, not a distribution from the IRA, but I don't have any experience with surrendering an annuity held in an IRA. It's also possible that the IRA was a CD IRA with a long term and this is a CD early-withdrawal penalty, which I would expect to be similar.
