In order to obtain accredited investor status, traditionally you had to fulfill at least one of the following criteria involving income and net worth criteria.
- Having a net worth of greater than $1 million USD as an individual or with a spouse or spousal equivalent (not including the value of the primary residence)
- Having an income of $200,000 USD as an individual or $300,000 USD combined with a spouse or spousal equivalent in each of the two previous calendar years with the expectation of maintaining that income level in the current year.
Regarding the income requirement mentioned above, the same method must be used all three years to determine the level of income, whether single or joint.
Recently, the SEC has made some modifications to the accredited investor definition that changes who may claim accredited investor status. Let’s look at how to get accredited investor status in 2021:
- Now the definition of accredited investor includes those who qualify based on professional certifications or credentials as opposed to just requiring a minimum net worth. This includes people who have a Series 7, 65, or 82 license. The amendment also indicates that other credentials may enable potential investors to achieve accredited investor status in the future.
- Persons who are knowledgeable employees of a private fund also qualify now for accredited investor status.
- Other than rural business investment companies (RBICs) and reporting advisors, SEC- and state-registered investment advisors can now obtain the status of accredited investor.
- An entity that owns investments valued at $5 million USD or greater such as a government body or Indian tribe may now be classified as an accredited investor.
- A limited liability company (LLC) with assets of $5 million USD minimum may be designated as an accredited investor.
- Family offices with a minimum of $5 million USD in assets that are under management may be categorized as accredited investors.
With the expansion of accredited investor status, potential investors now have an array of options when seeking how to get accredited investor status.
