The SEC's accredited investor definition was last updated in 2020 and remains in effect for 2026. There are now five pathways to qualify — income, net worth, professional licenses, entity status, and knowledgeable employee status. Most individuals qualify through income or net worth.
An accredited investor is an individual or entity that meets specific financial thresholds or credential requirements established by the U.S. Securities and Exchange Commission (SEC) under Regulation D of the Securities Act of 1933.
Accredited status matters because it grants access to private investments — such as private equity, real estate syndications, hedge funds, and venture capital — that are exempt from SEC registration requirements. The rationale is that accredited investors have the financial sophistication and resources to evaluate and absorb the risks of these unregistered securities.
Approximately 13% of U.S. households currently qualify as accredited investors, representing a significant but selective segment of the investing public.
You can check whether you likely qualify using our free quiz below. However, to actually invest in a Regulation D Rule 506(c) offering, you need a verification letter from a licensed attorney or CPA. Most investment sponsors are required by law to obtain this before accepting your investment.
The income pathway is the most common way individuals qualify. To meet the income threshold, you must have earned above the applicable limit for the two most recent calendar years and have a reasonable expectation of meeting the same threshold in the current year.
Per year for the past two consecutive years, with expectation of same in current year
Combined income for the past two consecutive years, with expectation of same in current year
For official verification, attorneys and CPAs typically require W-2s or 1099s, tax returns (Form 1040), or a letter from your employer confirming your salary for the past two years.
If your income doesn't meet the threshold, net worth is an alternative pathway. This is particularly valuable for retirees or individuals with significant assets but lower current income.
Excluding the value of your primary residence — either individually or jointly with a spouse or spousal equivalent
The exclusion of your primary residence from net worth calculations is one of the most misunderstood aspects of the accredited investor test. Here's exactly how it works:
| Asset / Liability | Counts Toward Net Worth? |
|---|---|
| Brokerage and investment accounts | ✓ Yes |
| Bank and savings accounts | ✓ Yes |
| Retirement accounts (IRA, 401k) | ✓ Yes |
| Second homes and rental properties | ✓ Yes |
| Business equity | ✓ Yes |
| Primary residence value | ✗ Excluded |
| Primary residence mortgage balance | ✗ Deducted (reduces net worth) |
| Credit card and personal debt | ✗ Deducted (reduces net worth) |
| Student loans | ✗ Deducted (reduces net worth) |
The 2020 SEC amendments added a professional credentials pathway, recognizing that financial sophistication — not just wealth — should grant accredited status. Individuals with active licenses in the following categories qualify regardless of income or net worth:
General Securities Representative license — held by most stockbrokers and financial advisors
Investment Adviser Representative license — required for most fee-based investment advisors
Private Securities Offerings Representative license — specifically for private placement specialists
The license must be active and in good standing at the time of investment. An expired or suspended license does not qualify.
Accredited investor status is not limited to individuals. Several types of entities also qualify:
| Entity Type | Qualification Criteria |
|---|---|
| Banks, broker-dealers, insurance companies | Automatically qualify by entity type |
| Investment companies registered under the Investment Company Act | Automatically qualify |
| Trusts | $5M+ in assets AND not formed specifically to make this investment |
| Corporations, LLCs, partnerships | $5M+ in assets AND not formed specifically to make this investment |
| Family offices | $5M+ AUM, not formed to make this investment, and investment directed by a sophisticated person |
| Any entity in which all equity owners are accredited investors | Entity qualifies automatically regardless of asset size |
| Knowledgeable employees of private funds | Directors, executive officers, trustees, or employees who participate in investment activities |
The fastest way to check is our free 3-minute quiz, which walks through each qualification pathway and tells you which one — if any — applies to you. No signup required to see your results.
Your individual income exceeded $200K in each of the last two years · Your joint income exceeded $300K in each of the last two years · Your net worth (excluding primary home) exceeds $1 million · You hold an active Series 7, 65, or 82 license · You are a knowledgeable employee of a qualifying private fund
A self-assessment is useful for understanding your status — but it is not sufficient for actually investing in most private offerings. Under Rule 506(c) of Regulation D, investment sponsors are required to take reasonable steps to verify that each investor is accredited.
The third method — a third-party verification letter from a licensed professional — is the most widely accepted approach because it provides the clearest legal safe harbor for sponsors and is not investor-specific (you can use the same letter with multiple sponsors within its 90-day validity period).
AccreditedNow connects you with an independent licensed attorney or CPA who reviews your documents and issues a Rule 506(c) verification letter. The letter is accepted by Reg D investment sponsors and is valid for 90 days from the date of issue.
Licensed attorney or CPA review. 3–5 business day turnaround. Rule 506(c)-ready and accepted by Reg D sponsors. 100% refund if we can't provide the service.
Get My Letter — $199 →No — the $200,000 individual and $300,000 joint income thresholds have been in place since 1982 and are not indexed to inflation. The SEC has considered updating them but has not done so as of 2026. This means more households qualify today in real terms than when the thresholds were originally set.
Yes. IRA, 401(k), 403(b), and other retirement account balances count toward your net worth for accredited investor purposes, even though they may be subject to early withdrawal penalties.
You would not qualify under the income test for that year — you need to meet the threshold in each of the two most recent years. However, you may still qualify under the net worth test or professional license pathway.
No. Only the income matters, not the individual status of each spouse. If your combined income meets the $300,000 threshold for the past two years, you qualify jointly even if neither of you meets the individual $200,000 threshold alone.
Third-party verification letters are generally valid for 90 days under the SEC's safe harbor. After 90 days, you'll need a new letter for any new investments — though the same letter can typically be used for multiple sponsors within the 90-day window.
No. The free quiz and printable status summary are for personal, educational use only. They are not legally recognized verification documents. For official Regulation D compliance, you need the $199 attorney or CPA verification letter.