You have two problems. One, if you do not pay off the 401(k) loan within 60 days of separating from service, it is deemed a distribution and you must pay taxes in a penalty on it.
two, you can’t pay off the loan after 60 days, and you aren’t supposed to be allowed to make deposits to a 401(k) except via payroll deposits while you are working for the employer. So I have no idea what the plan did with the money you sent them. They should not have been allowed to put it back in your account.
The distribution can’t be reversed if it’s more than 60 days. You owe the tax and the penalty, there’s no way around that. If the company took your money and put it back in the account that’s an illegal contribution, but I think the enforcement of that is on the administrator and not on you.
@dmertz ??
