My employer offers three categories under 401k:
The Traditional and Roth are well-known and like the Traditional and Roth IRA. The sum of contributions to these are capped at around $19k annually by IRS. The After-Tax category can be used in order to make contributions in excess of $19k but the money going into it is taxed as well as earnings on it at time of withdrawal. Because of that people rollover the After-Tax money into a Roth IRA which is allowed and the background behind the so called mega backdoor Roth conversion.
My question is say I contributed $10k to after-tax and when I wanted to do the rollover the account has $11k in it. Thus it earned $1k. My company does not allow me to rollover just the original amount. I have to rollover entire amount. How much taxes will I be paying on the $1k earnings? Will it get taxed like ordinary income or is there any early withdrawal penalty I will have to pay (how much?) even though I am rolling over entire amount to Roth IRA?