Accredited Investor FAQ

Many private investments are only open to "accredited investors." This FAQ explains what that means, how it's checked, and what you can still invest in if you don't qualify. Rules and dollar thresholds change, so check the cited SEC sources before relying on any of this. Figures were checked on October 14, 2026.

What is an accredited investor?

The SEC defines accredited investors in Rule 501(a) of Regulation D. For an individual, you generally qualify if any one of these is true:

• Income: you earned more than $200,000 (or more than $300,000 together with a spouse or spousal equivalent) in each of the prior two years, and reasonably expect the same this year.
• Net worth: your net worth is more than $1 million, alone or with a spouse or spousal equivalent, excluding the value of your primary residence.
• Professional licenses: you hold a Series 7, Series 65, or Series 82 license in good standing.
• Knowledgeable employees: you are a "knowledgeable employee" of a private fund that is offering the securities.
• Insiders: you are a director, executive officer, or general partner of the company selling the securities.

Certain entities also qualify, including:

• Banks, brokers, registered investment advisers, insurance companies, and registered investment companies.
• Corporations, partnerships, LLCs, and similar entities with more than $5 million in total assets that weren't formed just to make the investment.
• Trusts with more than $5 million in assets, not formed to make the investment, directed by a sophisticated person.
• Entities that own more than $5 million in investments and weren't formed to make the investment.
• Family offices with more than $5 million in assets under management, and their family clients.
• Entities in which every owner is an accredited investor.

How is accredited status verified?

It depends on which version of Rule 506 the offering uses.

• Rule 506(b): the company can't advertise the offering publicly. Investors usually self-certify their accredited status, for example by completing a questionnaire, and the company must reasonably believe them.
• Rule 506(c): the company can advertise publicly, but every buyer must be accredited, and the company must take reasonable steps to verify it. Common methods include reviewing tax returns or W-2s for the income test, reviewing bank, brokerage, and credit reports for the net worth test, or getting a written confirmation from a registered broker-dealer, SEC-registered investment adviser, licensed attorney, or CPA who has verified your status within the prior three months.

What can I invest in if I'm not accredited?

More than many people think. Each option has its own rules, risks, and limits.

Regulation A+ ("mini-IPOs")

Companies can raise money from the general public under Regulation A. - Tier 1: up to $20 million in a 12-month period. - Tier 2: up to $75 million in a 12-month period. If you're not accredited, you generally can't invest more than 10% of the greater of your annual income or net worth in a Tier 2 offering, unless the securities will be listed on a national exchange.

Many beginner-friendly real estate platforms use Tier 2. See the Zero Entry Pool.

Regulation Crowdfunding (Reg CF)

Startups and small businesses can raise up to $5 million in 12 months through an SEC-registered funding portal or broker-dealer. Non-accredited investors have a 12-month limit across all Reg CF offerings: - If either your annual income or net worth is under $124,000: the greater of $2,500 or 5% of the greater of your income or net worth. - If both are $124,000 or more: 10% of the greater of your income or net worth, capped at $124,000. - Accredited investors have no Reg CF limit.

Rule 506(b) private placements

A company can sell to an unlimited number of accredited investors and up to 35 non-accredited investors in any 90-day period. Each non-accredited investor must be "sophisticated," meaning they have enough knowledge and experience (alone or with a purchaser representative) to evaluate the investment, and must receive disclosure documents. In practice, many sponsors still accept only accredited investors.

Rule 506(c) private placements

Accredited investors only. If an offering is advertised publicly under 506(c), non-accredited investors can't participate.

Rule 504

Companies can raise up to $10 million in 12 months under Rule 504. It's used less often, and state securities rules typically apply.

Public non-traded REITs and BDCs

These are registered with the SEC and sold to the public, but they don't trade on an exchange. Minimums are often modest, but redemptions can be limited or suspended, and fees can be high.

Interval funds

Registered funds that hold less liquid assets, such as private credit or real estate, and offer to buy back shares periodically (often quarterly), usually only for a limited percentage of the fund.

Publicly traded REITs, BDCs, and MLPs

Real estate investment trusts, business development companies, and master limited partnerships (often energy pipelines) trade on stock exchanges. Anyone with a brokerage account can buy them, and they're liquid, but prices can swing with the market.

Self-directed IRAs

See Where Your Money Sits: 401(k)s, IRAs & Self-Directed Accounts for more. A self-directed IRA, held with a specialized custodian, can hold many alternative assets. It doesn't change your accredited status. IRS rules on prohibited transactions are strict, and mistakes can be costly, so get professional advice.

What are "qualified purchasers" and "qualified clients"?

These are higher tiers that some funds require.

• Qualified purchaser: generally an individual (or a couple investing jointly) who owns at least $5 million in investments, as defined by the SEC. Some private funds are open only to qualified purchasers.
• Qualified client: a standard that lets an investment adviser charge performance fees. As of an SEC order effective June 29, 2026, it means at least $1.4 million under management with the adviser, or a net worth of more than $2.7 million (excluding your primary residence). These replaced the previous $1.1 million and $2.2 million thresholds.

Where to go next

• Not sure what kind of investor you are? Try Find Your Fit.
• Starting small? See the Zero Entry Pool.
• Most of your money in a 401(k) or IRA? Read Where Your Money Sits.
• Browse the map of 50 entry points.

Sources (checked October 14, 2026)

• Investor.gov, "Updated Investor Bulletin: Accredited Investors": https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/updated-3
• Investor.gov, Accredited Investors glossary: https://www.investor.gov/additional-resources/general-resources/glossary/accredited-investors
• 17 CFR 230.501 (accredited investor definition), eCFR: https://www.ecfr.gov/current/title-17/section-230.501
• 17 CFR 230.506 (Rule 506(b) and 506(c), including verification methods), eCFR: https://www.ecfr.gov/current/title-17/section-230.506
• 17 CFR 230.504 (Rule 504), eCFR: https://www.ecfr.gov/current/title-17/section-230.504
• 17 CFR 230.251 (Regulation A tiers and the 10% limit), eCFR: https://www.ecfr.gov/current/title-17/section-230.251
• 17 CFR 227.100 (Regulation Crowdfunding limits), eCFR: https://www.ecfr.gov/current/title-17/section-227.100
• 15 U.S.C. 80a-2(a)(51) (qualified purchaser): https://www.law.cornell.edu/uscode/text/15/80a-2
• SEC order adjusting qualified client thresholds (Rule 205-3), Federal Register, May 1, 2026: https://www.federalregister.gov/documents/2026/05/01/2026-08480/order-approving-adjustment-for-inflation-of-the-dollar-amount-tests-in-rule-205-3-under-the

Disclaimer

This FAQ is for educational purposes only and is not investment, tax or legal advice, or an offer to buy or sell any security. It simplifies complex rules. Whether you qualify for a given offering is determined by the issuer and applicable law. Consult a securities attorney or licensed professional before investing.