Unfortunately, you are not allowed to split the annuity amount and use some for one purpose and the rest for another and receive a tax advantage.
The distribution will need to be made if you require to have access to the principle for any purpose.
A reallocation outside of a qualified plan is not usually termed a rollover. A rollover is when you move all the funds from one retirement account into another like account. If you at anytime receive funds then there is a distribution which triggers a taxable event.
You can receive your funds, report the distribution (you will receive a 1099R from the holder showing the taxable amount), and then you can use whatever portion you choose to invest. The interest is not really tax free but tax deferred. You pay tax on the interest when you have a distribution. Since you received no tax benefit from the contribution you made, that portion should not be shown on the 1099R as taxable.
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