Loan default from a 401(k)

[3510derby]

I went out on Long Term disability in 2019. I had a 401(k) loan. The amount remaining was $36,000. It defaulted in 2019.  It there any tax breaks for this situation? I use the money to payoff a 2nd mortgage loan in2017.

[DavidD66]

No, there are no "tax breaks" for defaulting on a 401(k) loan.  If you don't repay, you're in default, and the remaining loan balance is considered a withdrawal. Income taxes are due on the full amount. And if you're younger than 59½, you may owe the 10 percent early withdrawal penalty as well.