Depending on the rules of your plan, when you leave your current job the balance of the current loan is due and payable in full immediately, or within 30 days after you leave the current job. That too is not up for debate.
If the loan balance is not paid in full within the time constraints of your plan and loan agreement, then the lender will withdraw the balance due from that 401(k) and they don't need your permission to do so. You aleady agreed for that to happen at the time you took out the loan. But there is a possible work-around that will avoid any penalties, depending on the retirement plan offered at your new job and the rules and requirements of that plan.
At the new job, roll over say, $80K from the old 401(k) to the new 401(k) you will establish with your new employer. Then take out a loan against the new 401(k) for the balance due on the existing loan, and use that money to pay off the existing loan. That way, there's no early withdrawal penalties or taxes assessed on any 401(k) funds used for this purpose.
You'll need to check the rules and requirements of your old plan first, to see how much of a grace period if any, you will have to pay the existing loan in full after leaving the old job. You'll also have to determine how fast you can complete the rollover to a new 401(k) (assuming your new employer offers a 401(k) plan) and what the borrowing rules and requirements will be for you on that new plan.
So if your balance on the existing loan is $28K and you can take out a new loan from your new 401(k) after completing the rollover and use that money to pay off the old loan, that would mean your payments on the new 28K loan would also be lower most likely, depending on the interest rate.
I would be very interested to know if this will work for you, thus avoiding paying taxes on 28K as well as the early withdrawal penalty. Most likely, if the loan is paid off with an early withdrawal of 28K,that amount would most likely raise your AGI enough to put you in a higher tax bracket for the 2018 tax year. So if you can utilize my method, you may be able to avoid the higher tax bracket, taxes in excess of 23% on the early withdrawal, and the 10% early withdrawal penalty.
Now for buying a house, if you are a first time home buyer you can withdraw a maximum of $10,000 from your retirement account penalty free for that. But do understand that it will NOT be tax free. You will still pay taxes on that early withdrawal. To avoid the penalty, you must use every dime of that early withdrawal as a down payment on your first home, and you must close on the sale within 60 days of the withdrawal.
So if you take a $10,000 early withdrawal for a first time home purchase, make sure you have at least $2000 from other income sources that you can utilize to pay taxes on that early withdrawal.
Finally, if you are married and your spouse has a 401(k), then your spouse can also withdraw a maximum of $10,000 from their 401(k) penalty free if your spouse has never owned a home before. That would give you a total of 20,000 to put down on your first house. But then you'd need to come up with about $4000 from other income sources to pay the taxes on both of your withdrawals. So keep that in mind also.
