10b5-1 plans, explained
Many insider sales, and some purchases, are made under a 10b5-1 plan: instructions set up months in advance. Knowing which trades were planned changes how much they tell you.
The InsiderBeacon team ยท October 23, 2026
In short: a 10b5-1 plan lets an insider set their trades in advance, so they can trade later even while knowing inside information. Since 2023, directors and officers must wait at least 90 days before the first trade. A planned trade's timing was chosen months earlier, so it says less than one made on the day.
What a 10b5-1 plan is
Insiders almost always know something the market doesn't, which makes it hard for them to trade at all without risking an insider trading charge. SEC Rule 10b5-1(c), adopted in 2000, gives them a defense: if they set up a written plan when they did not have material non-public information, specifying the amounts, prices and dates (or a formula for them), trades made later under that plan are protected even if they know something by then.
Executives use them mostly to sell: to diversify, pay taxes on vesting stock or fund big purchases, on a schedule that doesn't depend on the trading window.
The 2023 rules
After criticism that plans were being set up and changed opportunistically, the SEC tightened them in December 2022, effective from 2023:
- Cooling-off period. Directors and officers can't trade under a new or changed plan until the later of 90 days after adopting it or two business days after the company reports results for that quarter, capped at 120 days. Other insiders wait 30 days.
- Certification. Directors and officers must certify, when they adopt a plan, that they have no material non-public information and are acting in good faith.
- One single-trade plan a year, and limits on running overlapping plans.
- Good faith throughout the life of the plan, not just at the start.
- Disclosure. Companies report each quarter which directors and officers adopted or ended a plan, and Form 4 now has a checkbox showing whether a trade was made under one.
How to read a planned trade
- A planned sale is mostly noise: the decision was made at least three months earlier, often as part of a regular schedule.
- A planned purchase still shows the insider chose to buy, but not when. Its timing tells you little.
- Look at the plan's start. A plan adopted right before a run of bad news, or changed just before a big sale, can still be interesting. The adoption date is in the company's quarterly report, and often in the Form 4 footnote.
- An unplanned sale by a CEO, outside any plan, is the sale worth a closer look.
InsiderBeacon reads the 10b5-1 checkbox and footnotes on every filing. Planned buys don't count toward clusters, sales show "pre-arranged plan" on their alert, and you can turn off alerts for planned sales entirely. The same goes for Form 144 notices, which show the plan's adoption date when there is one.
Questions
How long is the 10b5-1 cooling-off period?
For directors and officers, the later of 90 days after adopting or changing the plan, or two business days after the company files its results for that quarter, with a maximum of 120 days. For other insiders, 30 days.
How can I tell if an insider trade was under a 10b5-1 plan?
Since April 2023, Form 4 has a checkbox for it, and filers usually add a footnote with the plan's adoption date. Companies also disclose plan adoptions and terminations by directors and officers each quarter.
Are 10b5-1 plans legal?
Yes. They're an affirmative defense to insider trading charges under SEC Rule 10b5-1(c), as long as the plan was adopted in good faith without material non-public information and followed as written.
For information only, from public SEC and congressional filings. Not investment advice. Disclaimer