401K active loan, then hardship request on balance with resignation

[Aeolia]

How is this disbursement handled/ calculated per tax penalties:            An open 401k loan. But, then subsequent resignation with hardship request for balance of 401k funds??

[RatherBeGolfing]

What does the document say?

Are distributions allowed immediately after termination or do they have to wait?  

[Lou S.]

If the document allows for immediate distribution on termination it would seem a regular distribution for separation of service.

The loan offset would be added to the cash portion to determine the 20% federal withholding.

If the plan does not allow immediate distribution as RBG notes but allows hardship to terminated employees then you would process the hardship as normal and the loan would presumably go into default under the terms setup in the participant loan program unless he keeps loan payments current (an unlikely scenario given the above facts).