7k Metals Setting the Gold Standard for Ethical and Transparent Gold-Backed IRAs

What should you watch out for when buying gold for your self-directed IRA? Gold has been the standard for kings and queens, governments, banks, and the rich to store wealth for thousands of years. So it’s no wonder more people are turning to gold-backed IRAs for retirement savings. 

Unfortunately, as the popularity of gold-backed IRAs grows, so does the number of bad actors looking to exploit unsuspecting newcomers. And while the idea of adding precious metals to retirement savings is appealing, the process of starting or converting to a gold-backed IRA can become complex and fraught with pitfalls if not pursued wisely. That’s why, when surveying the precious-metals landscape, one will discover 7k Metals sets the gold standard in ethical and transparent business practices, especially for those buying precious metals for their self-directed IRAs.

What Is an IRA and What Does Gold Have to Do With It?

But before diving into the pitfalls, let's quickly cover what an IRA is and how gold fits in. Simply put, an individual retirement account (IRA) is a savings account with tax benefits designed to help you save for retirement. Regular IRAs are managed by financial institutions offering a limited menu of investment options—usually stocks, bonds, and mutual funds of the institution’s choosing. In contrast, a self-directed IRA offers more flexibility and control. You choose your own third-party custodian and “direct” them to buy qualifying alternative assets like real estate, private equity, and certain precious metals. But because private equity and real estate are often too complex and expensive for the average person, IRAs backed by precious metals are becoming very popular. 

Most IRAs can be set up as either a traditional or a Roth IRA, depending on your income. And in case you’re wondering, the "Roth" name comes from Delaware Senator William Roth hat tip to Bill—who was instrumental in creating this special type of IRA. Whether a traditional or Roth, a gold-backed IRA is just a self-directed IRA that holds physical gold.

With a traditional gold-backed IRA, you contribute pre-tax income, and the assets you direct your custodian to purchase, including gold, grow tax-deferred until you start making withdrawals in retirement, at which point the withdrawals are taxed as income. In contrast, a Roth gold-backed IRA allows you to contribute after-tax income, and any increase in value is tax-free, meaning you can make tax-free withdrawals in retirement.

Five Hidden Risks of Gold-Backed IRAs

When considering a gold-backed IRA, it’s crucial to be aware of some common traps and risks. While a gold IRA can be a valuable tool for retirement planning, it's important to avoid these five mistakes:

Mistake No. 1: Not Understanding the Fees

Opening and maintaining a gold IRA often involves various fees, such as account setup, annual administrative, storage, transaction and custodial fees. Some companies even impose account termination fees. Unfortunately, some unscrupulous companies inflate these charges, significantly reducing your savings just to set up the IRA. These costs can quickly add up and erode the value of your assets over time. Before opening an account, get a detailed breakdown of all fees and compare costs across several gold IRA providers to find the most affordable option. If you’re not getting a full picture on all the fees, consider it a major red flag.

How 7k is Doing Things Better: As I’ve taken a deep-dive into 7k Metals, it’s clear to me that they believe in full transparency in every aspect of their business, including fees. And believe me, in the precious-metals arena, this is not always the case. However, with 7k Metals, it is the case, as they function in a paradigm where their customers are community—family. It’s important to note that 7k doesn't offer IRAs and doesn’t give investment advice or provide custodial or fiduciary services. Rather, they connect their customers with trusted third-party IRA custodians, and 7k offers them the best possible pricing on IRA-eligible gold and silver. 7k makes normal margins on the precious metal they sell to IRA custodians without any kickbacks or commissions. And they provide a clear, detailed breakdown of all costs upfront, so you know exactly what you’re paying for. 7k expects the IRA custodians they work with to treat customers with transparency, integrity and fairness with no hidden costs and reasonable custodial fees.

Mistake No. 2: Not Recognizing Price Gouging

One major pitfall to watch out for is price gouging by companies that sell precious metals at margins far exceeding what is appropriate for bullion. (Remember, bullion is simply gold, silver or other precious metals in bulk form, valued by its weight and purity.) These companies may lure customers in with fear tactics and promises of security and growth, but then they charge exorbitant premiums on the metals themselves. This practice is not only unethical, but it can significantly diminish your investment's potential right from the start. It's crucial to be aware of current market prices, or spot prices, and compare them with the prices offered by the company. You can check spot prices at reputable financial news websites, precious-metals exchanges or directly through market apps. There will be a retail markup, or premium, over spot price, but if the markup seems excessively high, it's a clear sign that the company may not have your best interests in mind.

How 7k is Doing Things Better: 7k Metals stands out by offering competitive and fair prices without price gouging. Customers can trust that their purchases come with no hidden fees or excessive markups. Plus, 7k preferred customers, or members, receive an additional discount, ensuring they get the best possible value. This commitment to fairness and transparency makes 7k Metals a trusted resource for your gold-backed IRA journey. 

Mistake No. 3: Not Following IRS Rules and Regulations

Some companies try to skirt the IRS rules when it comes to gold IRAs, which can put your investment at risk. The IRS has very specific guidelines on what types of precious metals can be held in a gold-backed IRA, including strict purity and manufacturing standards. For instance, while gold coins minted by the U.S. Mint are eligible, other bars, rounds and coins may not be unless they meet specific IRS criteria. Collectible coins, jewelry or lower-purity bars and coins are not allowed. Yet some shady companies push dubious “semi-numismatic” coins for IRAs, which cost you more and earn them higher commissions but may not only be worth less on resale over time but may actually not be IRAeligible. Attempting to hold non-approved metals in your IRA may be considered a taxable distribution by the IRS, leading to penalties and problems. Consult your own advisors and always double-check that any metals meet the legal requirements before purchasing them for your gold IRA.

How 7k is Doing Things Better: If 7k Metals sells precious metals to your IRA custodian, the company makes sure it meets or exceeds IRS requirements. 7k offers full transparency on their costs, their premiums and their buyback pricing. And they will help you understand the differences between the products they offer so you make an informed decision. Their commitment to compliance and transparency means you can trust that the precious metals you purchase for your IRA will meet IRS guidelines. 

Mistake No. 4: Not Diversifying Beyond Gold

Unfortunately, many customers start their IRA journey by “putting all their eggs in one basket.” While gold has a long track record and can serve as an inflation hedge with other unique benefits, many are not aware that you can also own silver, platinum and palladium with your gold-backed IRA. This knowledge gap often stems from a lack of education provided by the company, rather than any oversight on the customer’s part. It may also arise because the company doesn’t offer anything other than gold and they simply don’t want to lose the sale.

How 7k is Doing Things Better: 7k Metals prioritizes education and offers a range of precious metals for your IRA. The 7k team will work with you and your IRA custodian to find the mix of IRA-eligible precious metals you want at a price you can afford. And because 7k’s IRA sales team isn’t commission-based, you won’t feel any pressure or hype—just facts. 

Mistake No. 5: Not Understanding the Required Minimum Distributions (RMDs)

Not all companies and IRA custodians take the time to educate their clients about the nuances of required minimum distributions (RMDs) for gold IRAs. Just like a traditional IRA holding stocks, bonds and mutual funds, you can't leave the gold or other precious-metal assets in your IRA indefinitely. Once you reach age 72, you may be required to take RMDs each year or pay steep penalties. Satisfying RMDs may require special care when your IRA consists of non-divisible assets like coins or bars, making proper planning essential.

How 7k is Doing Things Better: 7k Metals understands the importance of proper planning when it comes to IRAs backed by precious metals, including RMDs. Their team will work with your chosen IRA custodian and financial advisors as they help you navigate the complexities of RMDs. 7k’s preferred third-party IRA custodian, New Direction Trust Company (NDTCO), is a leader in self-directed IRAs and specializes in managing alternative assets like precious metals within retirement accounts. If you haven’t already chosen your IRA custodian, NDTCO can help. They’ll work with you and your financial advisors to implement a strategy to secure and grow your retirement savings and prepare to satisfy your RMDs.

The Bottom Line

There’s no doubt that gold-backed IRAs can be an excellent option for those looking to solidify and safeguard their retirement savings. However, to fully reap the benefits of a gold-backed IRA, it's important to approach the process with care and diligence. Not only should you consult your financial, legal, and tax advisors, but you also need to ensure you're working with a trusted company that prioritizes transparency and ethical practices. Distinguishing between bad actors and reputable firms is key to protecting your investment.

This is where 7k Metals stands out. Trusted by its customers, 7k not only offers fair and transparent pricing but also adheres to the highest ethical standards. Moreover, the company equips its customers with valuable educational resources, empowering them to make well-informed decisions. Transparency is essential throughout the process—without it, you risk falling into potential traps. With its proven track record, 7k Metals is committed to helping its customers avoid costly pitfalls and navigate the complexities of buying precious metals for retirement savings.

About 7k Metals

7k Metals is a precious-metals online retailer based in Idaho Falls, serving tens of thousands of customers worldwide. Through its unique membership model, 7k provides access to an extensive range of coin collections, bullion, and other numismatic masterpieces. Recently recognized as a “rising star” by Idaho Falls Magazine, the company continues to innovate in the industry, empowering everyday people to enter the precious metals market. Through its education resources and excellent customer support, 7k Metals makes the precious metals buying process accessible, reliable, and easy to navigate for everyone.

To learn more about what 7k Metals has to offer, including gold-backed IRAs, visit here.

Disclaimer

7k Metals is an online retailer of physical precious metals, including IRA-eligible precious metals. 7k is not an IRA custodian and does not offer or provide IRA custodial or fiduciary services. Information provided by 7k or available on 7k’s website is for educational purposes. 7k and its independent 7k Associates are not investment advisors and do not offer investment, tax, or legal advice. 

Buying, owning, and selling precious metals and numismatic coins carries risk and has legal and tax implications. The price and future value of precious metals and collectibles are based on many factors and are subject to market, economic, and political conditions. Past performance is no guarantee of future value. Consult your own legal, tax and financial advisors before purchasing precious metals.