No, they do not offset. Contributions and re-payments are two completely different things and they are processed differently under the tax law.
you have three years to repay the distribution if you take that option. If you repay the distribution, you will need to file an amended 2020 tax return. As it stands, you would have a 1099R that you must report on your 2020 tax return that shows $100,000 distribution.
To repay the distribution with the same money, you would have to stop your 401(k) contributions so that you had extra take-home pay. Then, send that after-tax money back to the 401(k) as a rollover repayment. Yes it would be less money because of the tax savings, and you would lose the match.
You may have to do some tricky tax planning to figure out if it is better to continue to make new contributions or to repay the previous distribution. I suspect you should make new contributions and maximize your match, and then try to repay the distribution with other funds if you can. Tax planners and investment advisors will probably be offering advice on this over the next two years.
