I have several of those in my tank. For some reason they really seem to like the rocks that the zoos are on more than others. They are some sort of tube/spaghetti worm and if you pick up the rock you'll see that it's built a little tube out of your sand. Mine likes to build up the substrate around the rock where they are living, neat little thing but never seen a picture as good as the one you posted.

By the way those arms that are extended are pretty long if you hadn't noticed yet.