Rule 501 of Regulation D: Accredited Investor Definition

Short answer: Rule 501 of Regulation D (17 CFR 230.501) is the definitions section of Reg D. Its best-known part, Rule 501(a), defines an "accredited investor": for individuals, net worth over $1 million excluding a primary residence, income over $200,000 ($300,000 joint) in each of the last two years, or certain securities licenses. The rule also defines affiliates, purchaser counting and purchaser representatives.

Anyone raising money for a startup, fund or SPV under Rule 506 relies on these definitions every day, usually without reading them. This guide walks through what Rule 501 actually says, the parts that trip up GPs, and what the SEC put out for comment in September 2026.

What is Rule 501 of Regulation D?

Regulation D is the SEC's set of rules for private offerings that are exempt from registration. Rule 501 sits at the front and defines the terms used by the operative rules that follow it: Rule 504, Rule 506(b) and Rule 506(‌c). If a word in Reg D has a special meaning, Rule 501 is where it's defined.

The rule has ten paragraphs, (a) through (j):

You can read the full text on the eCFR page for 17 CFR 230.501.

Who qualifies as an accredited investor under Rule 501(a)?

Rule 501(a) lists thirteen categories. A buyer is accredited if they fall into any one of them, or if the issuer reasonably believes they do at the time of sale.

Natural persons

• Net worth. Individual or joint net worth with a spouse or spousal equivalent over $1,000,000, excluding the primary residence (501(a)(5)).

• Income. Individual income over $200,000, or joint income over $300,000 with a spouse or spousal equivalent, in each of the two most recent years, with a reasonable expectation of the same this year (501(a)(6)).

• Professional credentials. Holders in good standing of credentials the SEC has designated by order (501(a)(10)). The SEC designated the Series 7, Series 65 and Series 82 licenses when it adopted this category in 2020.

• Knowledgeable employees of a private fund that relies on Section 3(‌c)(1) or 3(‌c)(7) of the Investment Company Act, investing in that fund (501(a)(11)).

• Insiders of the issuer. Directors, executive officers and general partners of the issuer, or of its general partner (501(a)(4)).

Entities

• Banks, registered broker-dealers, SEC- and state-registered investment advisers, exempt reporting advisers, insurance companies, registered investment companies, BDCs, SBICs and RBICs (501(a)(1)).

• Certain state and ERISA plans with assets over $5,000,000 or a qualifying fiduciary (501(a)(1)).

• 501(‌c)(3) organizations, corporations, business trusts, partnerships and LLCs with total assets over $5,000,000, not formed to buy the securities (501(a)(3)).

• Trusts with assets over $5,000,000, not formed to buy the securities, directed by a sophisticated person (501(a)(7)).

• Any entity in which all equity owners are accredited investors (501(a)(8)).

• Any other entity owning "investments" over $5,000,000, not formed to buy the securities (501(a)(9)).

• Family offices with over $5,000,000 in assets under management, and their family clients (501(a)(12) and (13)).

None of these dollar thresholds is indexed to inflation. The $1 million and $200,000 figures have stayed the same since the SEC adopted the definition in the 1980s, apart from the 2011 change that excluded the primary residence from net worth.

How do you calculate net worth for accredited investor status?

This is where most mistakes happen. Under 501(a)(5):

1. Leave out the primary residence as an asset.

2. Leave out the mortgage on it, up to the home's fair market value.

3. Count any mortgage above fair market value as a liability.

4. Watch the 60-day rule. If mortgage debt on the home went up in the 60 days before the investment, other than to buy the home, the increase counts as a liability. This stops people from cashing out home equity to qualify.

Joint net worth can include assets held only by the spouse or spousal equivalent, and the investment doesn't have to be made jointly.

How does Rule 501(e) count purchasers?

Rule 506(b) lets an issuer sell to an unlimited number of accredited investors and up to 35 non-accredited purchasers who, alone or with a purchaser representative, are financially sophisticated. Rule 501(e) sets how you count toward that 35:

• Accredited investors are excluded from the count.

• Relatives sharing the purchaser's home, and trusts or companies majority-owned by the purchaser and those relatives, are excluded.

• An entity normally counts as one purchaser. But if it was formed specifically to buy the securities and isn't accredited under 501(a)(8), each of its owners counts separately.

That last point matters for SPVs. An SPV formed to buy one company's shares doesn't let a sponsor sneak extra non-accredited investors past the cap. For more on how 506(b) and 506(‌c) differ, see our pillar on Regulation D: 506(b) vs 506(‌c).

What is a purchaser representative under Rule 501(i)?

A purchaser representative helps a non-accredited investor evaluate the merits and risks of a 506(b) deal. To qualify, the person generally can't be an affiliate, officer, employee or 10% owner of the issuer (with family exceptions), must have enough financial and business knowledge, must be acknowledged in writing by the purchaser for that specific investment, and must disclose any material relationship with the issuer. A blanket acknowledgment covering all deals doesn't count.

Rule 501 and 506(‌c) verification

In a 506(‌c) offering, where general solicitation is allowed, every purchaser must be accredited and the issuer must take reasonable steps to verify it. Rule 501 tells you who qualifies; Rule 506(‌c) tells you how hard you have to check. Our guide to 506(‌c) accredited investor verification for SPVs covers the methods. If your vehicle relies on Section 3(‌c)(7), the investor test is higher still: see qualified purchaser vs accredited investor.

What changed in 2026?

On September 30, 2026, the SEC requested public comment on possible new ways for individuals to qualify under 501(a)(10). The credentials under consideration include a US CPA license, the CFA charter, the CFP certification, the Series 79 license, the Series 86 and 87 licenses, and passing an accredited investor exam to be developed by FINRA. Comments are due December 4, 2026.

These are notices, not final orders. Until the SEC issues a designation order, the existing categories above are the ones that apply.

Frequently asked questions

What is Rule 501 of Regulation D?

It is the definitions section of Regulation D, codified at 17 CFR 230.501. It defines accredited investor, affiliate, aggregate offering price, purchaser counting, executive officer, purchaser representative, spousal equivalent and other terms used in Rules 504 and 506.

What is the Rule 501(a) net worth test?

A natural person qualifies with individual or joint net worth over $1,000,000, excluding the value of the primary residence and, up to its fair market value, the mortgage on it.

What is the Rule 501(a) income test?

Individual income over $200,000, or joint income with a spouse or spousal equivalent over $300,000, in each of the two most recent years, with a reasonable expectation of reaching the same level in the current year.

Do Series 65 holders count as accredited investors?

Yes. Holders in good standing of the Series 7, Series 65 or Series 82 license qualify under Rule 501(a)(10), based on the SEC's 2020 designation.

Can an LLC be an accredited investor?

Yes, if it has total assets over $5,000,000 and wasn't formed to buy the securities, owns investments over $5,000,000 under 501(a)(9), or all of its equity owners are accredited under 501(a)(8).

Are the accredited investor thresholds adjusted for inflation?

No. The dollar thresholds in Rule 501(a) are fixed amounts and are not indexed to inflation.

This article is general information, not legal or investment advice. It is not an offer to sell or a solicitation to buy any security. Confirm your offering's exemption with securities counsel.