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I found out that the Variable Annuity was bought inside an IRA

These details are very critical! If part of the retirement plan was rolled into an IRA, no matter what that IRA is invested in, that part of the money gets reported but not taxed. (A number of people at work do this: roll their member balance from their pension plan into an IRA so they can have investment control over it.)

Now, for the amount moved into a savings account, was that rolled into an IRA that, within it, has the savings account, or was that savings account a regular taxable account? If it was the former (retirement plan to an IRA that just happened to use a savings account to hold the money) then it isn't taxed but must be reported as a rollover.
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