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You can have after tax money in 401k/IRA. It can be claimed as After Tax & does not get taxed twice. You have to keep track of those funds thru IRS F-8606 when withdrawn.

Here's what I did when I had AT funds in 401k: When I converted the 401k to an IRA, I took the after tax funds as distribution(s) so then the IRA had no AT funds in it.

It's just additional paperwork ya gotta file & calculate every year to claim the AT funds so you AREN'T taxed twice on it. I'm probably missing a step or 2 (Pub & Instr) but my point is, you can have AT funds in pre-tax retirement accounts AND it can be claimed as AT so you don't pay tax on it again when distributed.
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