Hi and welcome to Just Answer!If you leave your employer - you will be offered to pay the loan back in full. Normally - you would be given three months. If not paid - the outstanding loan amount - in your case $29k - will be treated as a nonperiodic distribution - subject of income tax and 10% penalty if you are below 59 1/2 and none of exemptions may be used in your situation. So your assumptions are correct.If you will cash out the 401k in full - the total amount of pre-tax contributions, employer's contributions and earnings will be taxable. Also - additional taxable income might push you into higher tax brackets - so you might want to estimate your total income.
In additional - there will be state income taxes.
The distribution from the designated Roth account might be subject of the additional 10% tax on early distributions - if such distribution is taken within the 5-year period.
I already paid state taxes. Why would I have to pay them twice?
or do you mean just on the employer contributions?
You paid state taxes on your wages. You will not pay state taxes again on that.
However - you did not pay state taxes on employer's contributions and earnings in 401k. Upon distribution - that amount will be taxable for state tax purposes.
OK. I think I've got it. Thanks.
That will not be large amount - but you might want to keep that in mind - so you will be aware at the tax time.