IPO lockup expiration: What Kestrel Bay Retirement Advisors says to do

Why is lockup day rarely the day you can sell?

Employees often mark the lockup date shown in the prospectus, commonly 180 days after the IPO, as the day they can sell. Your employer's insider trading rules can shut the window before then. Look under “shares eligible for future sale,” then compare that date with the blackout calendar and any pre-clearance rules that apply to you.

Quarterly blackouts often begin a few weeks before quarter-end and lift shortly after the earnings release, usually within a couple of sessions. If your lockup expires during that stretch, you wait for the window. An early-release clause tied to the share price or an earnings report can move the date the other way, so read your own agreement; a coworker's date may not apply to your shares.

The shares may still sit at the stock plan administrator. A transfer to another brokerage can take several business days, and a first login may reveal missing selling permissions or an expired identity check. Test the account and download the release statements before the lockup ends. Those statements matter because Kestrel Bay Retirement Advisors rebuilds tax basis lot by lot before suggesting a sale.

A lockup release also doesn't override securities laws or your employer's policy. Officers and directors may have Rule 144, filing and longer cooling-off requirements that aren't covered by this employee example. Company counsel should confirm those restrictions before an order is entered.

How much tax does selling a quarter, half or all cost?

Tax on a post-lockup RSU sale generally applies only to the change between the release-date value already treated as wages and the sale price, provided the reported basis is correct. The number of shares sold determines the gain, while the holding period determines whether that gain is short-term or long-term.

Hypothetical: Rafael, 55, moved with his employer's storage unit when it was carved out in an IPO. He is a divorced engineering manager with a daughter in college. He has also bought ESPP shares every purchase period for 15 years and now holds about $650,000 of that stock with under $150,000 of basis.

Rafael's 2,500 RSU shares released at $120. The release created $300,000 of wages (2,500 × $120), and that $300,000 becomes his basis. At $144 on lockup day, the shares are worth $360,000 (2,500 × $144), leaving a $60,000 short-term gain: 2,500 × the $24 increase.

At an assumed 35% combined rate, for illustration, tax on the whole gain is $21,000 ($60,000 × 35%). A quarter produces a $15,000 gain and $5,250 tax; half produces a $30,000 gain and $10,500 tax. The table makes one detail easy to see: each slice changes the dollars at risk, but not the assumed rate.

Waiting beyond one year would cut the illustrated tax on all shares to $9,000, using an assumed 15% long-term rate ($60,000 × 15%), if the price stayed at $144. Brokers generally don't withhold tax from share-sale proceeds. Rafael should reserve the estimated amount on sale day and arrange a payment for that tax quarter with his tax professional.

Sell now or wait for long-term rates?

Before waiting for a long-term rate, divide the tax saving by the position's value; that percentage is the price decline that cancels the benefit. For Rafael, $12,000 ÷ $360,000 equals 3.3%, or $4.80 per share. If this stock has regularly moved more than 3.3% in a week since the IPO, waiting is mainly a price bet.

We would usually sell a planned slice in the first open window and hold the balance toward the one-year mark. The reason is plain: a modest post-release gain creates a modest tax benefit, while the entire $360,000 remains exposed to one newly public company. Investing involves risk, including loss of principal.

Price can also turn the tax calculation around. At $96, Rafael's shares would be worth $240,000, or $60,000 below his $300,000 basis. Selling all of them would create a $60,000 capital loss that could offset $60,000 of capital gains from his old ESPP lots that year, subject to wash-sale and other tax rules.

• Sell at lockup: Pay the short-term rate only on the $60,000 post-release gain, reduce concentration immediately and accept that heavy first-day selling may briefly depress the price.
• Hold beyond one year: Save an illustrated $12,000 if the price remains $144, while keeping $360,000 in one newly public company as later RSU releases add more shares.
• Split the sale: Sell a chosen slice in the first open window, reserve its tax and let the remaining lots approach their long-term dates.

How Kestrel Bay Retirement Advisors builds the first-window plan

A usable plan identifies lots, prices and tax dollars before trading opens. Kestrel Bay Retirement Advisors begins with release statements because the RSU value already taxed as wages normally becomes basis, and an incomplete 1099-B may not display it correctly.

Limit orders matter when many employees become eligible to sell together. A market order entered in the opening minutes accepts whatever price is available; a limit order sets the lowest sale price you'll accept, though it may never execute. The chosen share count should come from your concentration and cash needs, not a guess about the first day's high.

A Rule 10b5-1 plan may help with sales over time when access to open windows is uncertain. Under current SEC rules, most employees face a cooling-off period of at least 30 days, with longer periods for officers and directors. Your legal team must confirm eligibility, company procedures and the applicable waiting period.

• You pull each release date, share count and release price from the stock plan account. These records let us reconstruct basis by lot.
• We estimate quarter, half and full sales at three prices: 20% below release, at release and 20% above release. You receive a one-page summary.
• Together, we choose the first-window share count and limit price. If the stock is below basis, we check whether harvesting the loss fits the rest of the tax return.
• We calculate the estimated payment for the sale quarter. For trades spread across several months, we also assess whether a Rule 10b5-1 plan is practical.

Does age or position size change the sale?

Age matters mainly because it changes the years available for realizing gains, while position size controls how much damage one stock can do. A younger employee with lockup shares worth more than half of net worth usually has a stronger reason to sell early; below one-tenth, waiting for a long-term date adds less concentration risk.

At 55, Rafael's sale doesn't affect Medicare premiums today. IRMAA looks back two years: premiums at 65 are set by the income on the return filed for age 63. Our separate Medicare IRMAA article explains that timing. A lockup sale at 55 falls a full decade before that lookback window opens.

Rafael expects his lower-income stretch to run between retiring at 60 and turning 63. He would rather use those years for gains on his old ESPP position, which is worth about $650,000 with under $150,000 of basis. Spending a low-income year on IPO shares with only a $24-per-share gain may waste a better tax window for the older lots.

For an employee in their 30s whose new stock is a bit over half of net worth, we lean toward a larger first-window sale. If the position is under 10%, waiting may be reasonable when cash needs are covered. Concentration is measured against total net worth, including vested company stock, but unvested awards still matter because future releases keep adding the same exposure.

Which post-lockup mistakes cost employees money?

The costliest practical error is treating the proceeds as fully spendable because the brokerage account shows a large cash balance. A broker generally won't reserve income tax on the capital gain, so Rafael could reach filing season about $21,000 short after selling everything, with a possible underpayment penalty added.

RSU basis errors are quieter. If Rafael's 1099-B reports zero basis and his return isn't adjusted, the form could appear to show a $360,000 gain even though $300,000 was already included as wages. He needs the release confirmation, payroll record and 1099-B to reconcile the number before filing.

• Spending or reinvesting every dollar of proceeds leaves no cash for the estimated payment. For Rafael, an all-share sale creates about $21,000 of illustrated tax, plus a possible underpayment penalty if he waits until filing time.
• Selling below basis and buying the same stock within 30 days through an ESPP purchase or another acquisition can disallow part of the loss under wash-sale rules. Check the site's separate wash-sale article before scheduling the trade.
• Entering a market order in the first minutes of an open window can produce a poor execution price when employee selling volume is heavy. Choose a limit and decide in advance when an unfilled order should expire.
• Trusting the 1099-B basis without checking release statements can cause the same RSU income to be taxed twice. The separate cost-basis correction article explains how to compare the broker's form with payroll and release records.

What should you do this week if the lockup ends within 90 days?

Start with the documents and account access that can block a sale even after the restriction expires: the lockup agreement, blackout calendar, pre-clearance status and stock plan login. Then write down a target share count and estimated tax amount, because a price target alone gives you no instruction if the opening quote jumps or falls.

Ask for the next two quarters of blackout dates. One calendar isn't enough if the lockup ends during a closed window or an order doesn't fill before the next blackout begins. Also ask where pre-clearance requests go and how long approval usually lasts.

Download the lot file now. It should show the release date, number of shares and release price for every RSU lot. For each lot, note the date one year and one day after release; that is the practical date to verify before treating a gain as long-term with your tax professional.

• Find the exact end date in the prospectus or lockup agreement, including any early-release trigger.
• Request blackout dates for the next two quarters from the stock plan administrator or legal team.
• Confirm whether you are a designated insider who needs pre-clearance for each trade.
• Log in, verify selling permissions and download a lot list showing release dates and prices.
• Set the first-window target as a share count, choose a limit price and reserve cash for estimated tax.

What belongs on your first-sale checklist?

Your checklist should prove that the shares are eligible, the order is permitted, the basis is recorded and the tax cash has somewhere to go. It should also cover the next vest, because selling one lot while another arrives can leave your exposure almost unchanged.

Keep the completed list with the release statements and trade confirmation. A sale plan is incomplete if it ends at the first order; write down the remaining share count, the next open window and the next release date. Yes, that may mean paying some tax earlier to reduce the amount riding on one stock.

Kestrel Bay Retirement Advisors can review the lot file, model quarter, half and full sales, and show the estimated tax beside each choice. On 10/5/2026 the firm served 2,600 clients with $910 million under management. It works with people nationwide through video or phone meetings, and the minimum is $400K in investable assets.

Fees are described in a written schedule before an engagement begins. Submit the website request form if you want the first-window calculation checked against the rest of your holdings and tax calendar.

• Lockup end date confirmed; trading window open; pre-clearance received if required.
• Basis recorded by lot; each one-year-and-one-day date noted.
• Tax estimate written down; quarterly payment scheduled.
• Limit price chosen; plan set for remaining shares and the next vest.
• No same-stock purchase within 30 days when harvesting a loss.