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One of the problems in dealing with a question like this is the number of varialbles; not the least of which are your goals as a couple, family obligations and the fun spending that makes deferred spending palatable.

You mentioned the "need" to spend some of this $20k and the general idea that deferred taxation or no taxation is a good idea. Most will agree. But you must understand that for every benefit there is a cost. You will be giving up flexibility to spend the prinicpal without penalty in the next five years, opening up separate, additional accounts, potentially greater fees, definitely more monthly statements, etc. Keep in mind that it's not hard to achieve tax efficiency and even with RP2 or RP4, the annual taxation should be painless out of other, current income for many years to come.

For younger wage earners who qualify the arithmetic is clearly on the side of Roth vs. regular IRA's. In your case, I would probably vote to keep my powder dry and use these funds as the basis for clearing debt, getting my "fun" money out of the way and fool on from there.
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