Yes, you will pay some taxes on the conversion because of the pro-rata rule but your wife would have always had to pay taxes on the pre-tax amount distributions. Therefore, you aren’t penalized. You just can’t do the backdoor Roth for her since that strategy only works when there aren’t pre-tax funds in the traditional IRA.
Yes, it would make sense to convert her traditional IRA when you are in a lower tax bracket.
@dhuynh44
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