Separating from my company and have an outstanding 401K loan balance (1st home purchase) & if defaulted am I still subject to the 10% penalty?

[SS5]

Can I also avoid federal income tax if the loan is offset & the loan is withheld from total rollover?  And I do not add the cash to the ira to pay it off

[Rainman12]

A 401k loan, if defaulted, becomes a distribution subject to full taxes (including 10% penalty). First home exception applies only to IRAs.