1. We've never had Traditional IRA's before. The $5K sitting in each account we just opened a few weeks ago is it. As I understand it, we can convert those accounts to Roth IRA's with no taxes due because there have been no gains on the money. Is this correct?

With the facts as stated, yes. Just to perform a suspenders and a belt check, the universe of "traditional IRAs" includes SEPs, SIMPLEs, and rollovers from prior employer plans.

Make sure you report the contributions on your 2012 return, Form 8606, Part I (one for each of you). You will report the conversions in Part II of the same forms.

2. Can we convert immediately or do we have to wait some prescribed time? Is there any reason we should wait?

There's no tax law reason you can't do it the same day you make the contribution. I'd make the contribution today and do the conversion tomorrow, after your account shows the contribution, but check with your custodian to see what works for them.

Phil
Rule Your Retirement Home Fool