The remaining 300,000 in assets would be all post 86. Amounts distributed that are not RMDs under 401(a)9 are deemed to come from the pre 87 accrual balance first. This is why is does not work to roll over the post 86 assets to a TIRA and leave the pre 87 accruals in the plan to age 75 when the RMDs would begin. To get the full benefit of the pre 87 accruals, the only distributions prior to age 75 must be RMDs based on the post 86 balance.

The following is copied from the IRS Regs that addess this issue. See Answer A-2(c):
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Q–2. To what benefits under section 403(b) contracts do the distribution rules provided in section 401(a)(9) apply?

A–2. (a) The distribution rules provided in section 401(a)(9) apply to all benefits under section 403(b) contracts accruing after December 31, 1986 (post-’86 account balance). The distribution rules provided in section 401(a)(9) do not apply to the undistributed portion of the account balance under the section 403(b) contract valued as of December 31, 1986, exclusive of subsequent earnings (pre-’87 account balance). Consequently, the post-’86 account balance includes earnings after December 31, 1986 on contributions made before January 1, 1987, in addition to the contributions made after December 31, 1986 and earnings thereon.

(b) The issuer or custodian of the section 403(b) contract must keep records that enable it to identify the pre-’87 account balance and subsequent changes as set forth in paragraph (b) of this A–2 and provide such information upon request to the relevant employee or beneficiaries with respect to the contract. If the issuer or custodian does not keep such records, the entire account balance will be treated as subject to section 401(a)(9).

(c) In applying the distribution rules in section 401(a)(9), only the post-’86 account balance is used to calculate the required minimum distribution for a calendar year. The amount of any distribution from a contract will be treated as being paid from the post-’86 account balance to the extent the distribution is required to satisfy the minimum distribution requirement with respect to that contract for a calendar year. Any amount distributed in a calendar year from a contract in excess of the required minimum distribution for a calendar year with respect to that contract will be treated as paid from the pre-’87 account balance, if any, of that contract.

(d) If an amount is distributed from the pre-’87 account balance and rolled over to another section 403(b) contract, the amount will be treated as part of the post-’86 account balance in that second contract. However, if the pre-’87 account balance under a section 403(b) contract is directly transferred to another section 403(b) contract, the amount transferred retains its character as a pre-’87 account balance, provided the issuer of the transferee contract satisfies the recordkeeping requirements of paragraph (b) of this A–2.

(e) The distinction between the pre-’87 account balance and the post-’86 account balance provided for under this A–2 has no relevance for purposes of determining the portion of a distribution that is includible in income under section 72.

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It’s a two part transaction, first a distribution and then a rollover. See the following definition of a direct rollover, and from there you can click on “distribution” for that definition.
http://www.retirementdictionary.com/directrollover

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