A 403(b) is a qualified retirement plan.
Assuming that the money in the 403(b) was in a traditional 403(b) account and included no after-tax basis, the rollover to the Roth IRA was fully taxable. This becomes taxed conversion basis in her Roth IRAs. Distributions from her Roth IRAs come first from any contribution basis in her Roth IRAs, next from taxable-conversion basis. Assuming that she has made no regular contributions to a Roth IRA, her distributions are coming from the taxable-conversion basis, the distributions are not subject to income tax but, because she is under age 59½, if the Roth IRA distributions were made less than 5 years after the beginning of the year in which the rollover occurred, the distributions are subject to a 10% penalty recapture tax .
Enter all Forms 1099-R received. Enter the code J Form 1099-R for the distributions from her Roth IRAs. If the rollover from the 403(b) occurred in 2016, in the follow-up to entering the code 1, 2 or G Form 1099-R for this distribution from the 403(b) indicate that the money was rolled over to another retirement account and that the money was converted to a Roth IRA. Be sure to click the Continue button on the Your 1099-R Entries page and answer any additional follow-up questions. If the rollover occurred before 2016, this is where you will enter or confirm the amount of the previous rollover that became conversion basis in her Roth IRAs.
If the rollover was from a Roth 403(b) (code B or code H), the rollover to the Roth IRA has resulted in the contribution basis in the Roth 403(b) becoming contribution basis in her Roth IRAs.
