A 401K loan and a hardship withdrawal are two different things.
If you take a loan from your 401K, then the money is tax-exempt as long as you repay the loan on time.
If you take a hardship withdrawal from your 401K, the funds do not have to be paid back. But you must pay income taxes on the amount of the withdrawal. If you are under age 59 1/2, you may also have to pay an additional 10% penalty. The penalty may be waived under certain circumstances.
**Answers are correct to the best of my ability but do not constitute tax or legal advice.
