10b5-1 Plan Cooling-Off Period: 2026 Practitioner Walkthrough

If you advise insiders, run equity plan administration, or draft insider trading policies, the 10b5-1 plan cooling-off period is the rule you cannot afford to miscalculate. Get it wrong and the affirmative defense that protects every trade under the plan evaporates.

This walkthrough covers exactly how to calculate the cooling-off period end date, what resets the clock, and the operational traps that compliance teams are still stumbling over three years after the SEC's December 2022 amendments took effect.

Key takeaway: Before December 2022, Rule 10b5-1 had no mandatory cooling-off period. Insiders could adopt a plan and trade the next day. The 2022 amendments created a two-tier system with hard deadlines, written certifications, and a retroactive risk to prior trades if a plan is modified or terminated early.

What Is the 10b5-1 Plan Cooling-Off Period?

The cooling-off period is the mandatory waiting period between the date a 10b5-1 plan is adopted or modified and the date the first trade under that plan may execute. No trade can occur before it expires, regardless of what the plan itself says.

The SEC adopted the cooling-off requirement as part of Release No. 33-11138, effective February 27, 2023. The rule change was the first major overhaul of Rule 10b5-1 since its original adoption in August 2000, driven by academic research and investigative journalism showing that insiders had systematically exploited the absence of any waiting period to trade on material nonpublic information (MNPI).

For a broader overview of all the 2022 amendments and their compliance requirements, see Finrep's Rule 10b5-1 plan requirements guide.

How Long Is the Cooling-Off Period? The Two-Tier System

The length of the cooling-off period depends entirely on who is adopting the plan.

Sources: SEC Fact Sheet, Release No. 33-11138; Skadden client alert.

A few points that trip people up:

• "Director or officer" means Section 16 officers and directors, as defined under the Exchange Act. A senior VP with MNPI access who is not a Section 16 officer is subject to the 30-day period, not the 90-day period.
• A 10% beneficial owner who is a Section 16 reporting person but is not a director or officer of the issuer is also subject to the 30-day period. The longer cooling-off applies only to directors and officers, not to all Section 16 filers.
• Issuer share repurchase plans are explicitly excluded from the cooling-off requirement. The SEC deferred this question in the 2022 rulemaking and has not yet imposed a waiting period on issuers.

How to Calculate the Cooling-Off Period End Date: Worked Examples

This is where most errors happen. The director/officer cooling-off period has two prongs, and you must take the later of the two, subject to the 120-day cap.

Step-by-step process for directors and officers

1. Identify the plan adoption (or modification) date.
2. Calculate Day 90 from that date.
3. Identify the filing date of the 10-Q or 10-K covering the fiscal quarter in which the plan was adopted or modified.
4. Add 2 business days to that filing date.
5. Take the later of Steps 2 and 4.
6. Check: does that date fall more than 120 days after the adoption/modification date? If yes, cap at Day 120.

Example 1: The 10-Q prong controls

A CFO adopts a plan on October 15. The company's Q3 10-Q is filed on November 8 (24 days later). Day 90 from October 15 is January 13. Two business days after November 8 is November 12. The later of January 13 and November 12 is January 13. The first permitted trade date is January 13.

The 10-Q filing date was early, so the 90-day prong controls. The CFO cannot trade until January 13 regardless of when the 10-Q was filed.

Example 2: The 10-Q prong controls (late filer)

A director adopts a plan on May 1. The company files its Q2 10-Q on August 7 (more than 90 days later). Two business days after August 7 is August 11 (assuming August 8 and 11 are business days). Day 90 from May 1 is July 30. The later of July 30 and August 11 is August 11.

Here the 10-Q filing date is what controls. The director cannot trade until August 11, even though 90 days elapsed on July 30. This matches the example in the Latham and Watkins FAQ, which also clarifies that trades may commence on day two itself (not day three), because the cooling-off period expires at the beginning of that business day.

Example 3: The 120-day cap applies

A director adopts a plan on January 2. The company is a late filer and does not file its Q4 10-K until June 1 (150 days later). Two business days after June 1 would be June 5, which is 154 days after January 2. But the 120-day cap applies. The first permitted trade date is May 2 (Day 120), not June 5.

The 120-day cap is a hard ceiling. It exists precisely to prevent a situation where a very late periodic filing indefinitely extends the cooling-off period.

For non-officers: the calculation is simpler

Count 30 calendar days from the adoption or modification date. That is the first permitted trade date. No earnings filing prong, no cap analysis needed.

What Counts as a Modification That Resets the Clock?

Any change to the amount, price, or timing of purchases or sales under a 10b5-1 plan constitutes a termination of the existing plan and adoption of a new plan, triggering a fresh cooling-off period from the modification date. This is the single most common compliance error practitioners encounter.

Specific changes that restart the clock:

• Adjusting the number of shares to be sold or purchased
• Changing a price limit or price formula
• Altering the scheduled trade dates or frequency
• Suspending the plan and then reactivating it

Changes that generally do not restart the clock:

• Updating account numbers or broker-dealer contact information (administrative only)
• Adjustments for stock splits or similar mechanical corporate events, where the economic terms are unchanged
• Adding a new broker-dealer to execute trades under the same plan (the SEC treats a series of contracts with different brokers as a single plan, provided the underlying terms are unchanged)

The practical implication: an insider who wants to reduce their planned sale quantity because the stock price has moved must terminate the existing plan and adopt a new one, then wait out a full new cooling-off period before the first trade under the new plan can occur. There is no "minor modification" carve-out for economic terms.

Key takeaway: If you are advising an insider who wants to change any economic parameter of their plan, treat it as a new plan adoption. The compliance cost of getting this wrong is losing the affirmative defense for all trades, including those already executed under the original plan.

How the Cooling-Off Period Interacts with Company Blackout Windows

This is the operational question that most published guidance ignores, and it is where equity plan administrators spend the most time.

A company's blackout window and the Rule 10b5-1 cooling-off period are two separate, independent constraints. Both must be satisfied before a trade can execute. The cooling-off period does not suspend during a blackout window, and a blackout window does not extend or reset the cooling-off period.

The practical sequencing problem: Many companies require insiders to adopt 10b5-1 plans only during open trading windows. If a director adopts a plan on the first day of an open window following Q3 earnings, the 90-day prong of the cooling-off period will likely expire during the next blackout window (before Q4 earnings). The plan's broker cannot execute trades during that blackout, even though the cooling-off period has expired.

This means the first actual trade may occur in the open window following Q4 earnings, which could be 120 to 150 days after plan adoption, even if the cooling-off period technically expired earlier.

Coordination checklist for equity plan administrators:

1. Map the company's blackout calendar for the next 12 months before approving a plan adoption date.
2. Confirm the cooling-off period end date in writing and communicate it to the broker as the earliest permitted sell date. Companies are commonly expected to notify the broker of this date.
3. Verify that the cooling-off period end date falls within an open trading window, or document that the first trade will be deferred to the next open window.
4. Build the blackout/cooling-off interaction into the plan's written terms, not just the company's approval letter.

For a detailed guide to structuring the underlying blackout policy, see Finrep's insider trading blackout period policy guide.

Can You Have Two 10b5-1 Plans at the Same Time?

Generally, no. The 2022 amendments prohibit persons other than issuers from maintaining more than one overlapping 10b5-1 plan for open market purchases or sales of an issuer's securities.

There is one narrow exception for sequential plans: a person may maintain two separate plans simultaneously if trading under the later-commencing plan is not authorized to begin until after all trades under the earlier-commencing plan are completed or expire without execution.

The catch: if the first plan is terminated early, the first trade under the second plan cannot occur until after the applicable cooling-off period has elapsed from the termination date of the first plan. The sequential exception does not insulate the second plan from a fresh cooling-off period triggered by early termination of the first.

This creates a real trap. An insider who sets up a sequential second plan as a backup, then terminates the first plan early for any reason, must wait out a new full cooling-off period before the second plan can begin trading, even if the second plan was already in place and the cooling-off period for the second plan had already been calculated from the second plan's adoption date.

Can You Cancel a 10b5-1 Plan, and What Are the Consequences?

Yes, a 10b5-1 plan can be terminated early. Rule 10b5-1 does not prohibit cancellation. But early termination carries two significant risks that practitioners frequently underestimate.

Risk 1: Retroactive loss of the affirmative defense. As Morgan Stanley's guidance notes, "the amendment, suspension, or termination of a 10b5-1 trading plan could affect the availability of the affirmative defense for prior plan transactions if such an event calls into question whether the 10b5-1 trading plan was originally entered in good faith." If the SEC concludes that the plan was adopted as a scheme to trade on MNPI and then terminated once that MNPI became public, trades already executed under the plan lose their protection.

Risk 2: New cooling-off period before the next plan. If an insider terminates a plan and wants to adopt a new one, the full cooling-off period applies to the new plan from the termination date. For a director, that means waiting up to 120 days before the first trade under the new plan.

The SEC has specifically flagged suspicious termination patterns as an area of scrutiny. A pattern of adopting plans, executing trades, and then terminating before the next earnings cycle is exactly the kind of conduct the 2022 amendments were designed to deter.

Key takeaway: Early termination is not a clean exit. It can retroactively taint trades already made and restarts the clock for the next plan. Advise insiders to treat plan termination as a significant compliance event, not an administrative one.

Single-Trade Plans: The One-Per-12-Months Limit

A "single-trade plan" is a plan designed to effect the purchase or sale of the total amount of securities subject to the plan as a single transaction. The 2022 amendments limit any person other than an issuer to one single-trade plan per consecutive 12-month period.

A plan does not qualify as a single-trade plan if it gives the broker discretion over whether to execute as a single transaction, or if future acts depend on data not known at plan inception and it is reasonably foreseeable that multiple trades might result. Sell-to-cover plans for tax withholding on vesting awards are exempt from this limit.

The one-per-12-months limit is separate from the cooling-off period requirement. A single-trade plan still requires the applicable cooling-off period before the trade executes.

Written Certifications and the Ongoing Good Faith Requirement

Directors and officers must include written representations in every new or modified plan certifying that, at the time of adoption:

1. They are not aware of MNPI about the issuer or its securities.
2. They are adopting the plan in good faith and not as part of a scheme to evade Rule 10b-5 prohibitions.

Beyond adoption, the good faith requirement now extends throughout the entire life of the plan. The Skadden client alert summarizing Release No. 33-11138 notes that "influencing the timing of an issuer's disclosure so that trades under a plan are more profitable would run afoul of this ongoing good faith requirement." This is not a hypothetical risk. A CFO who delays a material announcement to allow plan trades to execute at a more favorable price has violated the ongoing good faith standard, regardless of when the plan was adopted.

Disclosure: What Goes in the 10-Q and on Form 4

The 2022 amendments added two disclosure layers that compliance teams must coordinate:

Form 4 and Form 5 checkbox. Section 16 reporting persons must check a box on Form 4 indicating that a reported transaction was made pursuant to a Rule 10b5-1(c) plan. This requirement applied to reports filed on or after April 1, 2023. For a detailed walkthrough of Form 4 transaction codes and the checkbox, see Finrep's Form 4 transaction codes guide.

Quarterly issuer disclosure. Issuers must disclose in their 10-Q and 10-K filings the adoption, modification, and termination of 10b5-1 plans by directors and officers. For calendar-year companies, this requirement first applied to the Q2 2023 Form 10-Q (filed in August 2023). Smaller reporting companies received a six-month deferral, with their compliance deadline falling six months after the standard deadline.

In practice, companies are disclosing the plan adoption date, the plan's general terms, and the cooling-off period end date (as the earliest permitted trade date) in the quarterly filing covering the period of adoption. There is no SEC requirement to disclose the cooling-off period end date specifically, but doing so reduces the risk of a staff comment letter questioning the adequacy of the disclosure.

Rule 144 and Section 16: Other Constraints That Still Apply

The 10b5-1 affirmative defense does not displace other securities law obligations. Two are particularly relevant for insiders executing plan trades:

• Rule 144 volume and manner-of-sale limitations continue to apply to affiliates selling restricted or control securities under a 10b5-1 plan. The cooling-off period and the Rule 144 holding period are independent clocks. Both must be satisfied before a trade can proceed. See Finrep's Rule 144 holding period walkthrough and Rule 144 volume limitations guide for the mechanics.
• Section 16 reporting on Form 4 remains required for all transactions by directors and officers, including plan trades. The two-business-day filing deadline is unchanged.

FAQ

Does the cooling-off period apply to issuer share repurchase plans? No. The SEC explicitly excluded issuer repurchase plans from the 2022 amendments. The SEC indicated it was still considering whether a cooling-off period for issuers was warranted, but as of 2026 no such requirement has been adopted.

What if my company's blackout period ends after the cooling-off period expires? Can I trade? Not until the blackout lifts. The cooling-off period and the company's blackout window are independent constraints. The first permitted trade date is the later of the cooling-off period end date and the end of the applicable blackout window.

Does changing my broker-dealer reset the cooling-off period? Generally no, if the underlying plan terms are unchanged. The SEC treats a series of contracts with different broker-dealers executing trades under a single plan as a single plan. But if you are effectively adopting a new plan with different economic terms through a new broker, a fresh cooling-off period applies.

Is a non-officer Section 16 reporting person (such as a 10% beneficial owner) subject to the 90-day or 30-day period? The 90-day (director/officer) period applies only to directors and officers as defined under Section 16. A 10% beneficial owner who is not a director or officer is subject to the 30-day period, even if they file Forms 4 and 5.

When did these rules take effect, and are further amendments pending? The amendments became effective February 27, 2023. Section 16 reporting persons were required to use the new Form 4/5 checkbox for reports filed on or after April 1, 2023. As of September 2026, no further amendments to the cooling-off period requirements have been adopted, though the SEC's broader share repurchase disclosure rulemaking remains active.

Can I adopt a 10b5-1 plan during a blackout period? Rule 10b5-1 itself does not prohibit plan adoption during a blackout period, as long as the insider is not aware of MNPI at the time of adoption. However, many company insider trading policies require plan adoption only during open trading windows. Check your company's policy before adopting a plan during a blackout.

The cooling-off period is not a bureaucratic formality. It is the structural foundation of the affirmative defense. Miscalculate it, modify a plan without recognizing the reset, or terminate early without understanding the retroactive risk, and the protection that justified the plan in the first place is gone.