I am planning to convert 5% of my traditional Rollover IRA to Roth IRA. Do I have to pay 10% penalty ? I am 57 now. I understand that I have to pay taxes on that 5% portion.

As long as you do this as a direct rollover there are no issues to worry about with respect to paying a penalty, because it's not a withdrawal. However, if you don't do this as a direct rollover - meaning you get a check from your current IRA account and then deposit that into a new Roth account - you run the risk of possibly having to pay a penalty. Reason is that the check you receive from the traditional IRA will automatically have 20% withheld for income taxes, but to avoid a penalty the amount you deposit into the new Roth IRA must equal the pre-tax amount of the withdrawal. In other words you would have to come up with the cash to make up the 20% withheld or else that 20% is considered an early withdrawal which would trigger the penalty. Also, if you don't make the deposit of the full pre-tax amount into the new Roth within 60 days of the withdrawal, it triggers both income tax and penalty. So clearly the best way to do this is as a direct rollover from your existing traditional IRA account to the new Roth account. The manager of your new Roth account ought to be able to handle the direct rollover for you with no fuss.