Both 1 and 2 are correct, assuming that the contributions were nondeductible and the individual has no other money in traditional IRAs. The amount of taxable income is the same whether converted to Roth or simply cashed out.
Yes, the contribution limit for 2020 is $6,000 (plus an additional $1,000 for those age 50 or over in 2020), or available earnings, whichever is less.
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-li...
