"The $10,000 amount that was directly rolled into the new Roth Contributory account has satisfied the 5 year holding period and is not taxable (e.g. qualified)." Not really. The fact that the distribution from the Roth 457(b) was qualified transforms the entire $10,000 (regardless of the composition of the $10,000 in terms of contributions or earnings) into contribution basis in the Roth IRA, but this $10,000 has not yet met the Roth IRA 5-year holding period. Because it is contribution basis, it can be taken out of the Roth IRA without being taxable whether or not it has met the Roth IRA 5-year qualification period. Contribution basis comes out first under the Roth IRA ordering rules.
"The $500 earnings, generated by that amount rolled over will need a separate 5 year period to be free from taxation." There is only one 5-year holding period for Roth IRA qualification, and that began on January 1, 2022. It's just that contribution basis is never taxable when distributed, even if the Roth IRA 5-year qualification period has not been met, so the first $10,000 distributed will not be taxable even if done before your Roth IRAs become qualified in 2027.
The rollover from the Roth 457(b) to the Roth IRA, if done as a direct rollover, was reported with code H in box 7 of the 2022 Form 1099-R. (Had the rollover been done indirectly, which is uncommon, the Form 1099-R would instead have codes 7 and B.)
Note that it's your responsibility to track your contribution basis in your Roth IRAs. Until 2027 when your Roth IRAs will have completed the 5-year qualification period you must file Form 8606 Part III if you take any money out of your Roth IRAs. That's accomplished by answering No as I described in my previous reply . If your 2022 Form 1099-R reporting the distribution from the Roth 457(b) had an amount in box 5, it should have been equal to the amount in box 1 and TurboTax will record this as Roth IRA contribution basis.
