What happens if I have a 401(k) loan but later lose or quit my job?
If you leave the company (whether voluntarily or not) and have a loan against your 401(k), you may have to repay the entire balance within 60 days. Check with the plan administrator to find out exactly how long you have to repay the loan.
If you don’t repay the loan, the remaining amount (less any nondeductible contributions) will be treated as a taxable distribution and reported on a 1099-R. Also, if you are under age 59 1/2, you’ll pay a 10% penalty for an early distribution.
When you enter your 1099-R, we'll calculate any additional taxes or penalties on your outstanding 401(k) loan balance.