SEC accredited investor rules, explained
Most private funds, syndications and startup deals are open only to accredited investors. Here is exactly who qualifies under SEC rules, how sponsors check, what accreditation does and does not protect you from, and how the rules may change after the SEC’s September 2026 proposals.
The short answer
You are an accredited investor if you meet any one of these
- Income: more than $200,000 in each of the last two years, or more than $300,000 jointly with a spouse or spousal equivalent, and you expect the same this year.
- Net worth: more than $1 million, alone or with a spouse or spousal equivalent, not counting your primary home.
- Professional license: you hold a Series 7, 65 or 82 license in good standing.
- Insider status: you are a director, executive officer or general partner of the company selling the securities, or a knowledgeable employee of the private fund offering them.
The definition comes from Rule 501(a) of Regulation D under the Securities Act of 1933. Entities such as companies, trusts and family offices have their own tests, covered below.
Check if you qualify
Tick anything that applies to you. This is an educational estimate, not a legal determination.
Why the rules exist
Under the Securities Act of 1933, any offer or sale of securities must be registered with the SEC unless an exemption applies. Registration requires detailed public disclosure and SEC review, which is expensive. Regulation D lets companies and funds raise money privately without registering, on the theory that certain investors can evaluate risks and absorb losses without the full protection of registration. The accredited investor definition is how the law identifies those investors.
The dollar thresholds date back to 1982. The income test has never been adjusted for inflation. The net worth test has stayed at $1 million, with the primary residence excluded since the Dodd-Frank Act of 2010. The Dodd-Frank Act also requires the SEC to review the definition every four years.
Rules for individuals
The income test
You qualify if your individual income exceeded $200,000 in each of the two most recent years, or your joint income with a spouse or spousal equivalent exceeded $300,000 in each of those years, and you have a reasonable expectation of reaching the same level in the current year. You must meet the same test, individual or joint, in both years. A “spousal equivalent” is a cohabitant in a relationship generally equivalent to a spouse, a category added in 2020.
The net worth test
You qualify if your net worth, alone or together with a spouse or spousal equivalent, exceeds $1 million. Joint net worth can include assets not held jointly. Key rules for your home:
- Your primary residence is not counted as an asset.
- Mortgage debt on it is not counted as a liability, up to the home’s fair market value.
- Any debt above the home’s value counts as a liability.
- If you increase the debt on your home in the 60 days before investing, other than to buy it, the increase counts as a liability. This stops people borrowing against their home just to qualify.
Professional certifications
Since 2020, individuals holding a Series 7 (general securities representative), Series 65 (investment adviser representative) or Series 82 (private securities offerings representative) license in good standing qualify, regardless of income or wealth.
Insiders and knowledgeable employees
Directors, executive officers and general partners of the issuer, or of its general partner, qualify for that issuer’s offerings. Knowledgeable employees of a private fund, generally senior staff and certain employees involved in its investments, qualify for investments in that fund.
Rules for entities
| Entity | How it qualifies |
|---|---|
| Corporations, LLCs, partnerships, nonprofits, business trusts | Total assets over $5 million, and not formed specifically to buy the securities offered |
| Trusts | Assets over $5 million, not formed to buy the securities, and directed by a sophisticated person |
| Any entity owned entirely by accredited investors | Every equity owner is accredited |
| Any entity with large investments | Owns investments over $5 million and not formed to buy the securities (added in 2020) |
| Family offices and their family clients | Assets under management over $5 million, not formed to buy the securities, and directed by a sophisticated person |
| Financial institutions | Banks, savings associations, registered broker-dealers, insurance companies, registered investment companies, business development companies and small business investment companies |
| Investment advisers | SEC- or state-registered advisers and exempt reporting advisers |
| Benefit plans | Certain employee benefit plans with over $5 million in assets or with investment decisions made by a bank, insurer or registered adviser |
Related investor categories
| Category | Who it covers | Why it matters |
|---|---|---|
| Accredited investor | The Rule 501(a) tests above | Required for most Regulation D private offerings |
| Qualified client | Generally $1.1 million under management with the adviser or $2.2 million net worth, excluding the primary residence, at the 2021 thresholds | Required before a registered adviser can charge you performance-based fees. In September 2026 the SEC proposed replacing these tests with the accredited investor standard. |
| Qualified purchaser | Generally individuals with at least $5 million in investments, and many entities with at least $25 million | Required for funds relying on Section 3(c)(7) of the Investment Company Act, often larger hedge and private equity funds |
| Sophisticated investor | A non-accredited person with enough knowledge and experience to evaluate the investment, alone or with an adviser | Up to 35 can invest in a Rule 506(b) offering, which must then give them extensive disclosure |
Rule 506(b) vs Rule 506(c)
| Rule 506(b) | Rule 506(c) | |
|---|---|---|
| Public advertising | Not allowed; generally requires a pre-existing relationship | Allowed, including online ads, webinars and social media |
| Who can invest | Unlimited accredited investors plus up to 35 sophisticated non-accredited investors | Accredited investors only |
| Proof of status | Investor self-certification is usually accepted | The issuer must take reasonable steps to verify status |
| What you will see | Questionnaires asking you to confirm status | Requests for documents or third-party letters, unless the high-minimum method applies |
If you found an offering through an online ad, podcast promotion or public webinar, it is almost certainly a 506(c) offering, and the sponsor must verify that you are accredited. Every fund we review lists which rule it uses in its SEC Form D filing.
How sponsors verify you
For 506(c) offerings, issuers commonly use one of these methods:
- Income documents: IRS forms such as W-2s, 1099s, K-1s or tax returns for the last two years, plus your written statement that you expect to qualify this year.
- Net worth documents: bank, brokerage and other asset statements, plus a credit report to check liabilities, generally dated within the last three months.
- Third-party letter: written confirmation from a registered broker-dealer, SEC-registered investment adviser, licensed attorney or CPA that they have verified your status within the last three months.
- High minimum investment: under SEC staff guidance from March 2025, an issuer may rely on your written representation of accredited status when you invest at least $200,000 as an individual, or at least $1 million as an entity, and confirm the investment is not financed by a third party for that purpose, provided the issuer has no contrary information.
Share sensitive documents only through secure portals, and prefer a third-party verification letter or a reputable verification service where possible, so your tax returns are not emailed around.
What accreditation does and does not mean
Accreditation is a legal permission, not a safety rating. Private offerings are not reviewed or approved by the SEC, usually disclose far less than public companies, and can be impossible to sell for years.
- Antifraud rules still apply. Sponsors cannot lie or leave out material facts, whatever your status.
- Form D: issuers must file a short notice with the SEC within 15 days of the first sale. You can search these on EDGAR.
- Bad actor rules: Rule 506 is generally unavailable to issuers whose key people have certain securities-related convictions, orders or bars.
- Resale limits: securities bought in private offerings are “restricted” and generally cannot be resold freely; under Rule 144, holding periods are typically six months to one year, and private fund agreements often restrict transfers much longer.
- State rules: most offerings also make notice filings with state securities regulators, who can be contacted with complaints.
If you are not accredited
You still have ways to access private-market style investments:
- Regulation Crowdfunding: online offerings through registered portals, with annual investment limits. If your income or net worth is under $124,000, you can generally invest the greater of $2,500 or 5% of the greater of the two; above that, up to 10%, capped at $124,000.
- Regulation A+ Tier 2: “mini-IPOs” open to the public; non-accredited investors are generally limited to 10% of the greater of their annual income or net worth unless the securities are listed.
- Public alternatives: publicly traded REITs and business development companies, and interval or tender-offer funds that hold private assets.
- Rule 506(b) as a sophisticated investor: if a sponsor already knows you and you have the knowledge to evaluate the deal.
What is changing
SEC actions in September 2026
On September 30, 2026, the SEC proposed changes to expand individual access to private markets. It also asked for public comment on new ways to qualify as an accredited investor: passing an exam to be developed by FINRA, or holding credentials such as the CPA, CFA or CFP designations, or Series 79 or Series 86/87 licenses. Separately, it proposed replacing the current qualified client tests with the accredited investor standard. None of these changes is in effect yet. Do not rely on them until final rules are adopted.
The INVEST Act in Congress
A House bill known as the INVEST Act (H.R. 3383) would write the accredited investor definition into law, index the wealth thresholds to inflation every five years, add pathways based on professional licenses, education or experience, and create a free exam route. It was referred to a Senate committee in December 2025 and has not become law.
What it could mean for you
New exam and credential routes would let more people qualify based on knowledge rather than wealth. Inflation indexing, on the other hand, could raise the income and net worth bars over time, which could push some current accredited investors out. Watch this page for updates as rules are finalized.
Frequently asked questions
What is an accredited investor?
An accredited investor is a person or entity that meets the SEC’s financial or professional criteria in Rule 501(a) of Regulation D, which allows them to invest in private offerings that are not registered with the SEC.
How much income do you need to be an accredited investor?
More than $200,000 in each of the past two years, or more than $300,000 together with a spouse or spousal equivalent, with a reasonable expectation of reaching the same level this year.
Does my home count toward the $1 million net worth test?
No. Your primary residence is excluded. Mortgage debt on it is also excluded up to the home’s value, but any amount owed above its value, and any increase in that debt in the 60 days before you invest (other than to buy the home), counts as a liability.
Can I become accredited without being wealthy?
Yes. Holding a Series 7, 65 or 82 license in good standing qualifies you, and knowledgeable employees of a private fund qualify for that fund’s offerings. In September 2026 the SEC asked for comment on adding an exam and credentials such as the CPA, CFA and CFP, but those are not law yet.
What happens if I claim to be accredited when I am not?
You may lose important protections, and misrepresenting your status can expose you to legal liability. Never sign a certification you cannot support.
Is an accredited investment safer?
No. Private offerings are not reviewed by the SEC, usually disclose less than public investments, and are hard to sell. Accreditation means the law assumes you can evaluate and bear these risks, not that the investment is safe.
Sources
- 17 CFR 230.501: Definitions and terms used in Regulation D (Legal Information Institute)
- SEC staff no-action letter on 506(c) verification, March 12, 2025
- SEC notice on potential new accredited investor pathways, Release No. 33-11447, September 2026
- SEC notice on potential new accredited investor pathways, Release No. 33-11449, September 2026
- SEC proposes amendments to expand retailization of private markets (Skadden, October 2026)
- SEC proposes to expand retailization of private markets (Ropes & Gray, October 2026)
- The INVEST Act and the accredited investor definition (2026)
About this guide
This guide summarizes federal securities rules for general education. It is not legal, tax or investment advice. Rules change and individual situations vary, so confirm your status with a securities attorney, CPA or registered adviser before investing.
Thresholds and rules are current as of the date shown. Proposals described above are not in effect unless and until adopted.