Everything equal - would you apply your tax return to your IRA for 2009 or 2010?

A traditional IRA has the possibility for a tax deduction in the year of the deduction, but withdrawals are taxed. A roth IRA does not have the tax deduction, but withdrawals are not taxed.

Another rule with roths that if you withdraw the money within 5 years of the contribution, there is a 10% premature distribution penalty for doing so. it ALWAYS will make sense to contribute in the last tax year just in case you need the money 4 years from now.

You need to look at your bracket. If you feel that your income in 2010 will be high enough so that most money will be in the higher bracket, then apply the IRA to 2010. If you feel that your earnings in 2010 will be the same as 2009, then apply the IRA to 2009.

I would you rather contribute for 2009. You can get an immediate return on your refund at your tax rate. And hopefully in 2010 you will go ahead and add more. It probably doesn't matter though, you probably won't be able to do you 2010 cap unless you are debt free.