What is a Rule 10b5-1 plan?
A Rule 10b5-1 plan is a written trading plan, adopted while you are not aware of material non-public information (MNPI), that specifies in advance the amount, price, and dates of future trades — or a formula for determining them. Once it's in place, a broker executes the trades automatically. Because you gave up discretion at a time when you had no inside information, the plan provides an "affirmative defense" if the SEC ever questions a trade.
Why executives use them
If a large share of your wealth sits in one company's stock, you face three pressures at once: concentration risk, the tax cost of selling, and trading restrictions during blackout windows. A 10b5-1 plan addresses the third and helps with the first. It lets you diversify steadily and unemotionally — selling on a pre-set cadence rather than trying to guess the right moment — and it allows sales even during blackout periods, because the decisions were made in advance.
How a plan actually works
You adopt the plan when you're clear of MNPI (typically during an open trading window). You define what will be sold and when — for example, a fixed number of shares each quarter, or shares above a set price. From that point you hand control to the broker; you can't cherry-pick which trades happen. That loss of discretion is the point: it's what makes the defense credible.
The 2023 rules you need to know
The SEC tightened Rule 10b5-1 in December 2022, effective in 2023. The key conditions:
- Cooling-off periods. Directors and officers must wait the later of 90 days or two business days after the next 10-Q/10-K filing (capped at 120 days) before trading begins. Other insiders wait 30 days.
- Good-faith requirement. Directors and officers must certify they are not aware of MNPI and are adopting the plan in good faith — and the plan must actually be operated in good faith, not just entered into in good faith.
- No overlapping plans and generally only one single-trade plan per 12 months.
- Disclosure. Companies must disclose the adoption and termination of insiders' plans each quarter (Item 408).
Coordinating the plan with your financial plan
A 10b5-1 plan is a compliance tool, not a strategy on its own. The strategy is deciding how much to sell and when, based on your diversification target, your tax budget across years, your cash-flow needs, and your estate goals. We help executives size and schedule the plan so it advances the broader plan — and we coordinate it with your securities counsel, who drafts the plan itself.
Common mistakes insiders make
- Modifying or canceling the plan to chase the stock — which can void the defense.
- Setting arbitrary sell dates disconnected from tax or diversification goals.
- Ignoring the tax bill from concurrent option exercises or RSU vesting.
- Treating the plan as "set and forget" without an annual review of the underlying goals.
Important: Skyview Financial Group does not provide legal advice. Rule 10b5-1 plans must be drafted and reviewed by qualified securities counsel. We coordinate the financial and tax strategy alongside your attorney.
Related: our equity compensation planning service and our guide to diversifying a concentrated stock position.
Disclosure: Skyview Financial Group, LLC is an SEC-registered investment adviser (CRD #310581). This content is educational only and is not individualized tax, legal, or investment advice. Figures and rules cited are current as of August 2026 and subject to change; please consult your CPA and, where applicable, legal counsel. Examples are illustrative and do not reflect any specific client.