Installing a transfer switch
Wow, the price of that transfer switch, and it doesn't even switch neutral.  That's typical Reliance, mid-tier yet high price because they know it's for a generator. 

Oh, hold on.  You haven't solved the neutral problem.  You need to either switch neutral, isolate neutral and ground on the generator (you can't have two neutral-ground bonds in the system), or not connect it in the first place, which is an option because your pump is 240V only and doesn't need it. 

I would go a different way and entirely moot the 1.5 foot issue, save a few bucks and give a lot more flexibility also.  

Subpanel with two feeds

Take, say, a Siemens 12-space main-lug (a main-breaker panel will be an impediment) and their generator interlock/tiedown kit.

For a very compact panel, use a Square D "QO" small 4-8 space panel, and their QO2DTI interlock, like this. This will require two main breaker retaining kits to hold down the backfed breakers, since the QO2DTI doesn't provide that naturally. A little more expensive but the quality is tip-top. 

The two breakers are interlocked.  One goes to the utility and can be any size (doesn't matter; circuit protection happens elsewhere). I recommend 60A because it's the same price as a 20A.  The other goes to the generator and is sized to protect the generator and wiring. 

Now if you only power the well, you could just make sure to use a 20A on the generator side, and at the main panel... then you have 20A protection in both modes, so you don't need an additional breaker for the well. You can just take it right off the main lugs.  At this point we're $110 into this deal.  And it's top shelf stuff; Siemens not Reliance. 

If you ever add more circuits and upsize your supply, you can put the well on a 20A breaker. 

Because it's a subpanel, the issue of proximity to the main panel is moot. 

In the existing main (utility) panel, the supply breaker is sized to protect the wire to the subpanel - you want #12 wire, so that means a 20A breaker (so you can just reuse the current well breaker).   I myself would run #10, #8 or #6 wire, with an eye toward future expansion, but keep the 20A breaker for now. 

Voltage drop is not a factor

I'm not sure how you computed 3 volt drop for a 20' wire run.  That run is too short to have that much voltage drop; if you're using the minimum legal wire size, 3 volt drop should happen at about a 100' run. Don't worry about it.