Compliance and filings

Accredited investor

Also called Rule 501(a) investor.

Definition

An accredited investor is a person who meets the Regulation D test in Rule 501(a): for an individual, net worth over $1 million excluding the primary residence, income over $200,000 ($300,000 jointly) in each of the last two years, or a Series 7, 65 or 82 licence; for an entity, assets over $5 million or all equity owners accredited. Most private funds admit only accredited investors.

Updated October 9, 2026Checked against our editorial standards

Example

An individual LP owns a home worth $1.4M with a $900,000 mortgage, holds $1.3M in brokerage and retirement accounts, and has $150,000 of other debt. The home and its mortgage are both excluded. Net worth for the test is $1.3M less $150,000, or $1.15M, above the $1M line, so the LP is accredited on net worth alone. Her salary of $180,000 would fail the individual income test, but joint income with her spouse of $320,000 in each of the last two years passes the $300,000 joint test as well. Either route is enough.

Confused with

Qualified purchaser. A higher Investment Company Act threshold, $5M in investments for an individual, that a 3(c)(7) fund must meet for every LP. Every qualified purchaser is accredited; most accredited investors are not qualified purchasers.

Qualified client. A separate Advisers Act test that governs whether a registered adviser may charge a performance fee. It has its own thresholds and is not the same as either of the above.

In practice

The status is established in the investor questionnaire inside the subscription agreement. In a 506(b) offering the LP self-certifies; in a 506(c) offering the fund must take reasonable steps to verify, with a third-party letter or the high-minimum-investment route. The test is applied at the time of sale, and the answers stay in the LP file for the auditor and any SEC examination.

Sources

Rule 501 definitions, including accredited investor (eCFR)www.ecfr.gov/current/title-17/chapter-II/part-230/subject-group-ECFR6e651a4c86c0795/section-230.501
SEC: accredited investorswww.sec.gov/resources-small-businesses/capital-raising-building-blocks/accredited-investors

Related terms

Rule 506(b)Rule 506(b) is the Regulation D safe harbour under which a fund may sell interests to an unlimited number of accredited investors, and up to 35 non-accredited investors, without registering the offering, on condition that neither the fund nor anyone acting for it uses general solicitation or general advertising.
Rule 506(c)Rule 506(c) is the Regulation D safe harbour that permits a fund to use general solicitation and advertising in its offering, provided every purchaser is an accredited investor and the fund takes reasonable steps to verify that status rather than relying on self-certification.
Qualified purchaserA qualified purchaser is an investor who meets the Investment Company Act threshold, generally an individual or family company with at least $5 million in investments or an entity with at least $25 million, which a fund relying on the Section 3(c)(7) exemption must verify for every limited partner.
3(c)(1) fundA 3(c)(1) fund is a private fund excluded from the definition of investment company under Section 3(c)(1) of the Investment Company Act because its securities are beneficially owned by no more than 100 persons, or 250 for a qualifying venture capital fund with no more than $12 million in aggregate capital contributions and uncalled commitments, and it does not make a public offering.