MM - usual disclaimer, I am no expert, and some of our tax savvy people can probably help you more, but...
Did you get the $5000 in 2010 or 2011? Is it taxable income? I assume it is. I think you have some time after the first of the year to make IRA contributions for 2010, but I don't know that for sure, and don't know if you could if you just open the account now. If you could, if you went with the traditional IRA the amount would be a deduction, and that would increase your refund. At least that's what happens with mine.
I think the best thing to do would be to drop by your bank, or any other, and talk with one of their people. They will know all the ins and outs and will be able to answer your questions about how this works and which would be best in your case. Of course, they will also be trying to sell you their investments, but you can pick their brains before you make any decision about that.