$200k Trap: Why Raising the Bar is Your Best Asset Protection Strategy

Legally, the SEC says an individual earning $200k is "Accredited." Practically, relying on that 1982 minimum might be your biggest liability risk in 2026. 📉
We are seeing a massive shift toward Syndicators voluntarily enforcing a $250k (individual) / $400k (joint) floor.

Why make it harder to raise capital? Because Suitability > Eligibility.
Here are the legal reality checks many GPs are waking up to:

1️⃣ The "Barely Qualified" Risk ⚠️ Investors who just scrape past the $200k mark are statistically more likely to be liquidity-constrained. If a deal pauses distributions or requires a capital call, these are often the first partners to panic—and the first to call a plaintiff’s attorney claiming they "didn't understand the risks."

2️⃣The "Standard of Care" Defense 🏛️ By voluntarily exceeding the statutory minimums, you build a powerful defensive narrative. You are demonstrating that you prioritize investor resilience over filling the raise. In a deposition, "We held ourselves to a higher standard than the SEC required" is a much better answer than "We did the bare minimum allowed by law."

3️⃣Inflation Has Eroded the Safety Net 💸 The $200k floor was set when that salary meant significantly more discretionary income. Today, a $200k earner in a Tier 1 market may be living paycheck-to-paycheck after mortgage and taxes. They may be eligible by the book, but they are not suitable for illiquid, risk-adjusted assets.

The Verdict: Raising your floor to $250k/$400k isn’t just about finding "richer" investors. It’s about curating a cap table that can actually withstand a storm without sinking the ship. ⚓

👇 See below for a sample clause we are seeing used in PPMs to address this.



Right to Reject Based on Suitability Standards

"Notwithstanding the Subscriber’s qualification as an 'Accredited Investor' as defined in Rule 501(a) of Regulation D under the Securities Act of 1933, the General Partner reserves the unilateral right, in its sole and absolute discretion, to reject any Subscription, in whole or in part, if it determines that the investment is not suitable for the Subscriber. The General Partner has voluntarily adopted enhanced suitability standards (e.g., minimum income thresholds of $250,000 individual / $400,000 joint) to ensure all Partners possess sufficient financial resilience to bear the risks of an illiquid investment. Meeting the statutory minimums of Regulation D is necessary for eligibility but does not guarantee acceptance."