Yes, you can deposit the rollover check into your Traditional IRA and choose not to invest it immediately.
Vanguard treats all money in the settlement fund as though it’s in VMFXX, so you don’t have to take any action to get that interest rate (current 7-day yield is 5.24%).
If/when you choose to convert your Traditional dollars to Roth, you can do so in your Vanguard online account.
It takes a few days for processing, but then your converted dollars will move from the Traditional IRA to your Roth IRA.
Please note that this is likely a taxable conversion, which means you’ll owe your marginal tax rate on every dollar converted.
If your conversion amount is less than $10,000, you’re looking at a couple hundred dollars in taxes owed in April.
The larger the conversion amount, the more taxes you’ll owe.
Alternatively, if you want to convert the entire check balance, you might be able to just deposit it directly into the Roth IRA.
I know a direct rollover/conversion is possible (if the 401(k) check was mailed directly to Vanguard; I’m not sure of indirect (when the check was mailed to you).
I strongly recommend that you fully understand what moves you’re making before you do them.
Making a mistake with retirement funds can be very costly- both in the short term with taxes and in the long term with retirement balances.
It can be overwhelming at first, but your future self will thank you!
