What accredited investor status actually requires, and whether LP distributions count toward it

Accredited investor status under SEC rules generally requires meeting either an income test or a net worth test, not both. The income test looks at individual income above a stated threshold for the last two years with a reasonable expectation of the same this year, or a higher combined threshold with a spouse. The net worth test requires net worth above a stated threshold excluding the value of a primary residence, meaning home equity does not count toward that number even though most other assets do. A common situation is income sitting just under the threshold with net worth made up mostly of home equity and retirement accounts. Since primary residence equity is excluded, that combination often does not clear the net worth test even when it looks substantial on paper, so it is worth running the actual numbers against both tests separately. On self-certification, most sponsors rely on an investor's own representation in the subscription documents rather than independent verification, though some deals under certain exemptions require third party verification such as a letter from a CPA or attorney. Signing a self-certification that turns out to be inaccurate can expose both the investor and the sponsor to rescission risk, so it is worth being conservative when checking that box. On investing through a self-directed IRA, the accreditation test is generally applied to the account owner, not the account itself, since the individual is the one making the investment decision, though the underlying assets in the account, including retirement balances, are typically excluded from the net worth calculation the same way other retirement accounts are. This is a fact pattern worth confirming with a securities attorney or the custodian before signing subscription documents, since the details can turn on the specific exemption the offering relies on.