After-tax 401(k)

 is a type of deferred 401k subaccount, with different rules from traditional and Roth 401k accounts. They are typically used in strategies to rollover money to Roth IRAs far in excess of normal contribution limits.

Advantages

 * Subject to much higher contribution limits than traditional 401ks (up to $50,000 in 2012)
 * Some 401ks allow for in-service distributions, allowing employees to roll over funds during employment without a triggering event.
 * Protection from creditors under ERISA.

Disadvantages

 * Death, for monies waiting for rollover, inheritor would be left with a non-deductible IRA with very complicated paperwork
 * Gains before Rollover are taxed as ordinary income
 * Losses before Rollover, "basis" could be lost if you don't leave a few pennies left
 * Management Risk: They can change the rules without warning.
 * Management Fee/Check writing fee high enough to eat into savings
 * Trustee Risk: It's my understanding be sending you 2 1099-R every year, for the rollover and gains, pray they calculate it right.
 * Legislative Risk, though hopefully you could complete the rollover before the benefits were ended.
 * Additional paperwork; many accountants aren't aware of these shenanigans.
 * Company fails nondiscrimination tests, resulting in a refund, (See Highly compensated employee)

After-Tax 401k limits
Traditional and Roth accounts share a employee contribution limit up to $17,000 per person. However, Section 415(c)(1)(A) limits total contributions to defined contribution plans to $50,000 in 2012. The limit for an after-tax 401k is the difference between the amount already contributed by the employer and employee, and the Section 415 limit.

IRS Announces Pension Plan Limitations for 2012