Yes, your wife’s unused basis is still $4,856.
Yes, you will leave $4,856 in the traditional IRA and do a reverse rollover with the rest. Then you will be able to convert the $4,856 to Roth IRA and use the basis up.
If you rollover your wife’s 401k to the traditional IRA then it will take longer to use up the $4,856 basis because of the pro-rata rule.
@dhuynh44
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