We would need to know why the plan trustee considered it a distribution rather than a loan.
One possibility is that you left the company. The outstanding balance becomes converted to a distribution and does not have to be paid back. Another possibility is that the loan was deemed to violate some plan rule or IRS rule. If it was a non-qualifying loan, that is counted as a distribution, but it still has to be paid back. Because you already paid tax, this creates an after-tax basis in the account, even if the account is normally pre-tax.
We can help you understand and explain this, but we need more details. You should have gotten a letter or other documents from the plan that your loan was considered non-qualified.
