There is no such thing as a 301 redirect with masking. If you choose masking, GoDaddy will use a frame set to show your domain in the page of your alternate domain. Regardless of what type of redirect you choose, there will be no redirect. There will only be frames when you choose "masking".
Redirects are only necessary for SEO when you are moving content from one domain to another. If you have registered alternate domains that have never had a website on them, they don't have any SEO value to pass on to your new site. In that case, the type of redirect doesn't really matter. Even 301 redirects are not going to help your SEO. Freshly registered alternate domains never help SEO, they only get type in traffic to those alternate domains to your site. Feel free to choose the type of redirect that you think will be best for users.
If some of the domains that you have do have SEO value and back links you will want to choose 301 permanent redirects. You shouldn't implement those redirects using GoDaddy. GoDaddy has a long standing problem in their redirect implementation. They don't show 301 redirects to search engine crawlers. See GoDaddy's 301 redirect/forwarding has some weird random middleman URL, kills link juice? Choose a more reliable redirect service or implement the redirects yourself on your own web server.
Masking has usability problems. There is almost never a case in which framed redirects are good for users.
- Masking dilutes your brand because users are going to see a variety of top level domains over your content rather than your preferred domain
- The URL at the top of the page doesn't change as users navigate your site with masking. That prevents users from bookmarking, sharing, or linking to deep pages.
