This is really confusing if you contributed to the traditional before Dec 31st and converted after Dec 31st my answer does not apply in that case. Otherwise, what was the sum total value of ALL your traditional IRAs on Dec 31st 2014? (husband and wife are separate) if it is not zero then you will not be able to convert to Roth tax free. But you will get some basis in your traditional IRA which will reduce your tax in a later year when you take funds from the traditional IRA but you will need to keep track of that basis from now until there is no money left in your traditional IRA. You can roll your traditional IRA into you company 401k to get around this problem but it is too late to do that for tax year 2014. If you go the 401k route continue to track your basis because you will want to convert back to the IRA before you withdraw the money so that you don't lose the tax benefit of the basis.
