The accredited investor definition

What the rule says

Regulation D defines the term in 17 CFR 230.501(a). It is a status test applied “at the time of the sale of the securities.” A person qualifies if the person is in one of the listed categories, or the issuer reasonably believes the person is. That second clause means the test is not purely about the investor’s true facts; it also looks at what the issuer could reasonably believe at the time of sale.

The definition is used by the Regulation D exemptions. Rule 506(b) allows sales to an unlimited number of accredited investors and to no more than 35 other purchasers in any 90-calendar-day period, each of whom must have such knowledge and experience in financial and business matters that they can evaluate the merits and risks of the investment (alone or with a purchaser representative). Rule 506(c) allows general solicitation, but then “all purchasers of securities sold in any offering under paragraph (c) of this section are accredited investors,” and the issuer must take reasonable steps to verify that status.

The natural-person tests

Net worth (501(a)(5)). Any natural person whose individual net worth, or joint net worth with a spouse or spousal equivalent, exceeds $1,000,000. The word is “exceeds”: exactly $1,000,000 does not qualify. Joint net worth may be the aggregate of the investor’s and spouse’s net worth, assets need not be held jointly, and the securities need not be bought jointly (Note 1 to paragraph (a)(5)).

The calculation has three residence rules. The primary residence is not counted as an asset. Debt secured by the residence, up to its estimated fair market value at the time of sale, is not counted as a liability, except that if that debt is larger than it was 60 days before the sale (other than because the residence was just acquired), the increase is counted as a liability. Debt secured by the residence in excess of the residence’s fair market value is a liability. A narrow carve-out in (a)(5)(ii) keeps the old calculation for purchases under a right held on July 20, 2010 by someone who then qualified on net worth.

Income (501(a)(6)). A natural person who had individual income above $200,000 in each of the two most recent years, or joint income with a spouse or spousal equivalent above $300,000 in each of those years, and who has a reasonable expectation of reaching the same income level in the current year. All three parts are required: the prior-year figure for each of the two years and the expectation.

Professional credentials (501(a)(10)). A natural person who holds in good standing one or more professional certifications, designations or credentials from an accredited educational institution that the Commission has designated as qualifying. The Commission designates them by order after notice and comment and posts the current list on its website, so check that list rather than relying on this page.

Insiders, employees and family clients

Paragraph (a)(4) covers any director, executive officer or general partner of the issuer, or of a general partner of the issuer. Insiders can be accredited as to their own company even if their personal wealth is modest. Paragraph (a)(11) covers a “knowledgeable employee” (as defined in Investment Company Act rule 3c-5(a)(4)) of an issuer that would be an investment company but for the exclusion in section 3(c)(1) or 3(c)(7). Paragraph (a)(13) covers a “family client” of a family office that meets (a)(12), where the family office directs the investment.

Entity categories

Many entity categories turn on a $5,000,000 line, again measured as “in excess of.” Under (a)(3) an organization described in section 501(c)(3) of the Internal Revenue Code, a corporation, Massachusetts or similar business trust, partnership or limited liability company qualifies with total assets above $5,000,000 if it was not formed for the specific purpose of acquiring the securities offered. A trust qualifies under (a)(7) with total assets above $5,000,000, not formed for the purpose, if a sophisticated person directs the purchase. A family office qualifies under (a)(12) with assets under management above $5,000,000, not formed for the purpose, and a person directing the investment who has the needed knowledge and experience. An entity of a type not listed elsewhere qualifies under (a)(9) if it owns “investments” (as defined in Investment Company Act rule 2a51-1(b)) above $5,000,000 and was not formed for the purpose. Under (a)(8), any entity in which all of the equity owners are accredited investors qualifies, and the Note permits looking through forms of equity ownership to the natural persons behind it.

Paragraph (a)(1) lists regulated institutions without a dollar test: banks, savings and loan associations, registered broker-dealers, registered investment advisers and exempt reporting advisers, insurance companies, registered investment companies, business development companies, SBICs and RBICs. It also lists state and ERISA plans, with a $5,000,000 total-asset test for state plans and for ERISA plans not run by a bank, insurance company or registered adviser. Paragraph (a)(2) covers private business development companies.

Worked examples

Net worth. An investor has $1,500,000 in assets not counting a primary residence, $100,000 in other liabilities, and a home worth $600,000 with a $500,000 mortgage that has not grown in the last 60 days. The home and the mortgage are both left out, so net worth is $1,500,000 minus $100,000, or $1,400,000, which exceeds $1,000,000. If the same investor instead took a $100,000 home-equity draw 30 days ago (mortgage now $600,000, still within the home’s value), that $100,000 increase is newer than 60 days and is counted as a liability, so net worth falls to $1,300,000.

Underwater home. Assets of $1,200,000 (home excluded), no other liabilities, and a home worth $500,000 with a $700,000 mortgage. The $200,000 above the home’s value is a liability: net worth is $1,000,000, which does not exceed $1,000,000. The calculator above applies these rules and also tests the income prongs.

Income. A couple earned $310,000 and $320,000 jointly in the two most recent years and expects at least $300,000 this year: qualified under (a)(6) jointly, even if neither spouse alone passed $200,000. If the second year had been $295,000, the test fails for that year no matter how high the first was.

Limits of this page

This page summarizes the text of Rule 501(a) as published in the eCFR. It does not cover state securities law (“blue sky” rules), the Commission’s posted list of qualifying credentials, how an issuer should document its reasonable belief, or whether a specific offering fits Rule 506. Only the issuer and its counsel can decide those. For state regulators, see the NASAA state securities regulator lookup.

Related Rule 144 and Regulation D topics

More from the same rules: The Rule 144 volume limitation, The Rule 144 affiliate definition.

Sources

• 17 CFR 230.501, Definitions and terms used in Regulation D, eCFR current text (issue date October 29, 2026). Read November 2, 2026.
• 17 CFR 230.506, Exemption for limited offers and sales without regard to dollar amount of offering, eCFR current text (issue date October 29, 2026). Read November 2, 2026.

Edition read: eCFR 17 CFR Part 230, current text, issue date October 29, 2026 (read November 2, 2026). Rules are amended from time to time; check the current eCFR text and the SEC’s guidance before relying on any figure. This page quotes and summarizes the rule text and does not replace it.