I am 32 and have about $2,500 in a variable annuity that I'm considering cashing out and put into a self- directed IRA.

I haven't contributed to it for over a year now because I'm a stay-at-home mom now. I noticed the yearly fees really cut into my actual earnings plus I wasn't pleased with the performance this year.

I know I'd have to pay a back-end load for cashing out but as long as I put it in an IRA account will I avoid the federal withholding tax?

Wouldn't I be better off taking the initial bite now for longer gains down the road and no expenses?

I don't anticipate going back to work for another 3-5 years so I probably won't be making regular contributions into an IRA until that time.

One more question - should I set it up as a reg. IRA or ROTH. (I already have a house so I wouldn't qualify for 1st time homeowners clause.)

PS- This isn't my only retirement investment - I have about 30k in some mutual funds with Fidelity. Just thought I'd like to go long on some individual stocks. I just opened a brokerage account with Ameritrade so I thought of putting it into that until I decide what to buy.

Any suggestions?