the plan must permit loans (otherwise it's a distribution). It must be paid back in 5 years otherwise a deemed distribution. There are limits on the amount that can be loaned. you must pay interest on it. the interest is not tax deductible unless used to buy a principal residence. The plan receives no basis for the interest paid, so it's taxable as part of the distributions you'll take just like if the money was earned form the plans other investments.
