Accredited Investor Qualification: 401k Distribution as Income

[Keith Meyer]

Question for the accountants and syndicators out there: Would you count someone taking a 401k/IRA distribution as income towards the $200k annual income requirement for accredited investor status?

For example: If someone earns $150k per year through their job, but decides to take advantage of the CARES Act and take a $100k 401k distribution spread over two years ($50k realized each year), would you qualify them as accredited since they would be demonstrating $200k of income each year?

[Roni E.]

Hello Keith, I do not think you will be able to be considered Accredited as you would need to show 2 past years of earned income that is over $200k for yourself or $300k for you and your spouse.  It seems you have the $200k for this year but I would think there could be a discussion of the $50k from 401k as is that truly "earned income"

Who is an accredited investor?

An accredited investor, in the context of a natural person, includes anyone who:

• earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year