Under current SEC rules, what is the income threshold for an individual to qualify as an accredited investor?
- AAnnual income exceeding $100,000 in each of the two most recent years
- BAnnual income exceeding $200,000 in the most recent year only
- CAnnual income exceeding $500,000 in the most recent year
- D$200k individual income, or $300k joint income, for two years plus current-year expectation✓ Correct answer
Why D — $200k individual income, or $300k joint income, for two years plus current-year expectation
Under Rule 501(a) of Regulation D, an individual qualifies as an accredited investor based on income if they had income exceeding $200,000 in each of the two most recent years (or $300,000 jointly with a spouse or spousal equivalent) and have a reasonable expectation of reaching the same level in the current year. Alternatively, an individual can qualify based on a net worth exceeding $1 million, excluding the value of their primary residence. The SEC expanded the definition in 2020 to also include holders of certain professional certifications and knowledgeable employees of private funds.
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