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The earnings on the after tax contributions can go into the the IRA, and in fact you will pay penalty if you withdraw them. So everything that moves from 401K to IRA Rollover is pretax and anything after tax must come out of the account. However, there is no penalty or taxes due because you have already paid tax on the after tax money. Its just that future income on the aftertax money is no longer in the tax protected account, so the income becomes taxable. This tax burden limits how fast it can grow.
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