You may be technically correct Jim, but I have personally never seen anyone exercise this option (as a tax professional and as retirement plan auditor). Basically, I don't really know why anyone would do this. If so, it has got to be a rare situation. Nothing that the average taxpayer would be doing.
I suppose it makes even less sense with the creation of the ROTH 401k. & the ROTH IRA. My feeling is that this might have been some tax strategy pre-1998 (pre ROTH). I have been a tax professional since 2000. Would explain why I have never heard of it.
So um, I have no idea why anyone would contribute to a 401k after-tax. My original answer stands. A post-tax 401k contribution is a PITA, mostly, if you ask me, with no useful benefit to the average middle class American. At least a ROTH 401k has some merits.
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