Your preference.

If you drop the lookup table, make sure that you add constraints to the column. "Integrity enforced in the application" = "Garbage data eventually"
Also consider that  if you need to fetch the data to populate a dropdown, without the lookup table you'll have to query a much larger table and do a DISTINCT on the results, which is a lot slower than querying a 5-row table. Finally, when, at some point in the future, someone decides that a 6th value is needed, consider how much work will be needed in each case (or when someone decides that Write-Off should become Write-off in every instance)