Do you qualify for an exchange fund? Eligibility requirements explained

Exchange funds are not open to the general public. They are private investment vehicles, and under SEC rules that means participation is legally restricted, not simply a matter of having enough money in an account. Three separate requirements decide whether you qualify: your accredited investor status, whether you can meet the fund's minimum contribution, and whether the fund currently has room for the stock you want to bring.

What eligibility for an exchange fund actually means

Anyone with a brokerage account and enough cash can buy into a mutual fund or an ETF. An exchange fund works differently. Because it is a private placement, federal securities law restricts who can participate at all, no matter how much you're prepared to invest. This is a legal requirement rather than a company preference, and it holds true whether you're contributing to Glidepath or any other exchange fund provider.

The accredited investor standard

Current SEC rules give you two paths to qualifying as an accredited investor, and you only need to clear one:

• Net worth: more than $1 million, not counting the value of your primary residence.
• Income: more than $200,000 in each of the past two years on your own, or more than $300,000 combined with a spouse, with a reasonable expectation of matching that this year.

Whichever test you clear is enough on its own. Passing the net worth threshold means your income doesn't matter, and the reverse is also true.

The minimum contribution

Clearing accredited investor status is only half of it. Every exchange fund also sets its own minimum contribution, and for Glidepath that figure is $100,000. This requirement stands apart from the accredited investor test above: you can pass the income or net worth bar and still need that amount available in eligible stock to actually contribute.

The condition most funds don't mention: whether the fund can use your stock

Satisfying the investor-side requirements doesn't automatically secure your spot. An exchange fund also has to manage the composition of what it's building on the stock side. If the shares you're bringing are already well represented in the fund's pool, or in heavier supply than the fund currently needs, you may need to wait for capacity to open up, or contribute less than you'd originally planned.

This part isn't something you control. It comes down to portfolio construction on the fund's side, and it's worth knowing before you assume any given stock is guaranteed a spot.

What eligibility does not require

A handful of things people sometimes expect to be requirements are not:

• No specific stock type required beyond the fund's ability to accept it. Any appreciated position is potentially workable, depending on the fund's current mix.
• No extended commitment on top of the standard terms. The seven-year holding period tied to the tax deferral is simply part of how exchange funds function under Section 721, not a separate eligibility bar.

Meet the bar and want to diversify your position without the tax bill? Check your eligibility for Glidepath.

Exchange fund eligibility, summarized

You generally qualify for an exchange fund if you meet the accredited investor standard ($1 million net worth excluding your primary residence, $200,000 individual income, or $300,000 joint income) and can meet the minimum contribution, which for Glidepath is $100,000. The one factor outside your control is whether the fund currently has capacity for the specific stock you want to bring.

Curious whether you'd qualify? Get started to find out.