401K loans are never income unless you default on the loan and stop making payments. Repayments are normally required to be made through payroll deductions. If you're no longer on the company payroll due to disability, I have never heard of a suspension rule, but it sounds like the company is allowing you to not to make payments without declaring the loan to be in default. Once the loan goes into default, it is treated as being converted into a distribution and you will owe regular income tax, plus a penalty if you are under age 55.
With that being the case, if they will give you the option of defaulting on half the loan in 2017 and half the loan in 2018, then you may be able to choose that option. You will need to talk to the plan trustee at your place of work. Otherwise, what typically will happen is that the entire loan amount will be treated as a single default and will be turned into a distribution at whatever date the default occurs.