You want to take a cash distribution that you will send back to the same plan trustee to repay the loan? That's what a deemed distribution is. It already happened. It is considered for tax and accounting purposes that you withdrew cash and paid the balance. You will get a 1099-R for the distribution and it's taxable (with penalty). I think you will find if you call the trustee that there is no more loan to pay back because it is already paid back. If you take a second distribution, you won't have anywhere to put it, and you will need to roll it over into a private IRA within 60 days or else it becomes another taxable distribution.
