Roth Conversion and Fixed Annuities

1) How does the 5 year clock work when a conversion is involved?

Example: opened a Roth in 2009 for a relatively small amount of $5,000. In 2010, converted a Traditional IRA to a Roth in the amount of $800,000. Taxpayer will be 67 years old in 2010. Does his 5 year window for the conversion amount end in 2014 or 2015?

2) If he has a fixed annuity inside his Traditional IRA, and convert to a Roth in 2010? What are the consequences in the annuity? Can a Roth have an annuity in it or vice versa? Taxpayer is over 59 1/2 years old.