PS241 wrote: a fee of $75 plus tax to maintain simplicity?
I don't see why you'd throw away a third of the money for "simplicity" while simultaneously paying 22% tax on your Roth IRA contributions. Taking money out of an IRA while simultaneously putting money into an IRA and getting taxed in both directions doesn't sound like simplicity to me. Put another $2,250 into her TIRA -- this is equivalent to $1,750 in your post-tax Roth IRA. Then she'll have the minimum for most Vanguard funds, and so will you.
$3,000 in her TIRA
$3,250 in your Roth IRA (= $5,500 maximum minus $1,750 minus the $500 you could have had from liquidating her 401k)
Total tax: $920 on your Roth IRA contribution
Total gross salary used: $2,250 + $4,167 = $6,417
or the "simplicity" option:
$0 in her TIRA
$5,500 in your Roth IRA ($500 from her eviscerated TIRA, $5,000 from income)
Total tax and penalties: $1,660
Total gross salary used: $6,410
So you're thinking about paying more tax to have less savings.
By the way, in your state taxpayers 55 or older can exclude $6,000 each of IRA conversions. 15% federal tax is a low rate, but paying a state tax now that you might avoid in the future makes the Roth choice a little shakier.