401k after tax contribution

[Rocky]

If T/P withdraws after tax contribution to 401k to pay mortgage off what would the penalty be?

I cannot quickly find an answer to this but logic tells me that since it was already taxed it would not be added to income in the year he took it out, but what about the 10% penalty? (Of course any interest touched would be added to income and penalty applied.)

The company he works for was sold and they are encouraging employees to rollover the old companies 401k. That is why he is even considering touching it.

References and advice appreciated.
Thanks,
Rocky

[Bees Knees]

After tax contributions to qualified plans come out tax free.

The problem is, after tax contributions earn pre-tax income while they remain inside the qualified plan. Thus, when you pull out money, you are dragging pre-tax earnings along with it, which will be taxed, plus be subject to the 10% early withdrawal penalty. The old 3-year rule, which allowed you to pull all after tax contributions out first in the first 3 years is no longer allowed. Thus, you will always be taking a portion of the pre-tax money out along with any after tax distributions.

[Rocky]

Thanks, Bees

Where do I find that written?

Thanks,
Rocky

[Bees Knees]

TTB, page 13-20.