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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 You have to keep track of those funds thru IRS F-8606 when withdrawn.

You need to separate IRAs and 401(k)s. The rules for excess contributions and after-tax contributions are very different for each.

Traditional IRAs are allowed to have non-deductible contributions, but those contributions must be documented on an 8606 for the year that they are put in.

401(k)s are only allowed to have after tax contributions if the plan allows, which many do not, and they should be designated as 'after-tax' when the contributions are made, since 'after-tax' contributions are placed in a different account, separate from the pre-tax contributions. 401(k) plans that do allow after-tax contributions may require that the full deferral amount ($18,500 for 2018, $19,000 for 2019) be made prior to making any after-tax contributions.

In this case, the OP did not designate the contributions as 'after-tax' when they were made, and, since they contributed to multiple 401(k)s for 2018, it's clear that they did not max out the full deferral amount in any single plan. They could see if one of the plans that they made contributions to will allow them to designate the excess contributions as 'after-tax' after the fact. I doubt that will happen, but if it does, the OP would be able to avoid paying taxes on the contribution amount when the money is withdrawn, or, if the plan allows, they could roll the money over into a Roth account within the 401(k).

To the OP: If one of your plans doesn't allow you to declare the excess contribution as 'after-tax' (which, as I said above, I doubt will be allowed, but it never hurts to ask), it does look like you can leave the excess contributions in the plan, rather than withdrawing them. You will have to pay taxes on the excess amount for 2018, and, as you are already aware, you will end up paying taxes again when the money is withdrawn. You will not be allowed to use the pro-ration between after-tax and pre-tax monies that is allowed for IRAs. Even if you have rolled the 401(k) money over to an IRA, the after-tax money in the 401(k) does not result in a basis for the IRA.

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.

Yes, you are missing the part that IRAs and 401(k)s need to be considered separately, and the rules for each are very different. The 'extra paperwork to file' is for IRAs. The 401(k) administrator places all after-tax contributions in an account that's separate from the pre-tax contributions, so there isn't need for extra paperwork on the contributor's part, but there will be a need for the contributor to make separate choices for the pre-tax account, the Roth account, and the after-tax account when they move the money out of the 401(k).

AJ
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