your question on whether or not to convert the $M rollover this year at the same time as the $N backdoor, really only depends on when you want to pay the tax on converting $M to Roth. $N nondeductible contribution will always be untaxed when converted, it just depends on when it gets converted over time, it now becomes the basis in a combined IRA pot of $M+$N. The larger $M is relative to $N the more tax you will pay on further backdoor conversions until it's fully converted and the basis goes to zero.
simplifying the previous example to just assume no basis in the rollover for $95k and you do $5K backdoor.
if you convert all $100k to Roth in 2024 you will pay tax on $95k
if you just do backdoor Roth conversion in 2024 and leave the $95k in the IRA, the backdoor will be taxed on (95/100)*5k =$4750, only $250 will be tax free, and you will be left with a $95K IRA with $4,750 basis. If you convert the rest in 2025 you will pay tax on $90,250. Overall you're still getting taxed on $95k it's just split between 2 years.
you can also do the backdoor non-deductible contribution to the IRA either way, and then decide to convert 50k to Roth and 50k next year etc, thinking of the overall tax effect of the conversion (e.g. if you convert too much and trigger the 3.8% NIIT), you don't have to think of these as separate things to decide on converting, it's a combined balance with a basis.
Remember to allow for estimated tax on the Roth conversion if it's significant to not meet the safe harbor amount (smaller of 90% of 2025 or 100% of 2024 [110% if AGI > 150k] etc). If you've not being paying quarterly ES you may get a penalty for Q1 if you've not already estimated for it and start in Q2, or you can make a one-off ES payment to line up with the Roth conversion but you would then you have to file Form 2210 Annualized Income method to show the timing and eliminate the penalty. If you pay quarterly ES based on 2024 tax method then it doesn't matter when or how much you convert in 2025 you will not get a penalty and owe the balance when you file in 2026.
Not a CPA, hope this helps.
