dmertz
Level 15

Retirement tax questions

Notice 2014-54 does *not* apply because the distribution in 2017 is/would be from an IRA, not from a 401(k).  Once the money has been rolled over to the IRA, in this case via recharacterization of the Roth rollover, IRA rules apply.  The fact that the money originally came from a 401(k) is irrelevant to the application of the IRA pro-rata calculation.  Upon rollover to the IRA, the money immediately loses it's character as having anything to do with a 401(k).

The transition rule of Notice 2014-54 applies only the original distribution from a qualified plan, *not* to a subsequent distribution from an IRA.  The transition rule simply means that the rule can be retroactively applies in reporting the distribution from the qualified plan; many people (apparently including yourself) did split distributions under the principal of Notice 2014-54 before the IRS officially blessed the procedure in Notice 2014-54.  Your distribution was effectively un-split as a result of the recharacterization, no different than had you rolled the entire 401(k) distribution directly to the traditional IRA.