I did some more research and found this on how to avoid the 10% penalty on 401(k) After Tax Savings Earnings that are distributed directly to you. Have to rollover the money within 60 days:
60-Day Rollover
Step 1
Set up a traditional IRA. If you have an existing traditional IRA and you wish to use it for your 60-day rollover, you can. Inform your custodian or trustee that you have received a distribution from a qualified plan and wish to roll the funds over into your traditional IRA.
60-Day Rollover
Step 2 Deposit the proceeds from your qualified plan distribution with your IRA custodian or trustee within 60 days of receiving the distribution. Your old plan administrator is required to withhold 20 percent from your qualified plan distribution and send it to the IRS for taxes. To avoid paying taxes and an early withdrawal penalty on the 20 percent withholding, you will have to contribute an amount equal to the amount withheld to your new IRA from another source along with the remaining distribution proceeds.
There is also a provision I've read on some websites that 401(k) After Tax Savings withdrawals may avoid the 10% penalty on Earnings when the proceeds are used "for certain college expenses", but I also read on Forbes that this exception only applies to
IRA early withdrawals and not 401(k) early withdrawals, so I would certainly do further research on the college expense exception.
See IRS
Topic 413 - Rollovers from Retirement Plans
and IRS
Topic 558 - Additional Tax on Early Distributions from Retirement Plans, Other Than IRAs Tax Topics - Topic 558 Additional Tax on Early Distributions from Retirement Plans, Other Than IRAs
More information on rollovers:
Publication 575 (2013), Pension and Annuity Income
And this is the form 5329 information you'll have to file to recapture any early withdrawal penalties:
http://www.irs.gov/pub/irs-pdf/i5329.pdf
Your financial planner would be familiar with this, or even Turbo Tax. I've used Turbo Tax for years and while complicated, you can use it to account for all kinds of retirement distribution options.