<prompt> Human: Long story short. We took a 401k loan to pay off medical debts. I had our first child and have an hour commute. I would love to find a job closer to home which is very plausible with a comparable salary. I have been with my present company for 6 years. My husband and I made 177k last year and on pace to make it this year he is in sales so it varies. My biggest concern is this loan. It is split into 2 loans so I could probably pay off the lower one and then just have a 10k loan. What are the tax implications? Is it worth it? I will save money in gas not much and will have an hour more with the baby each day which will improve overall happiness and sanity...haha. We also purchased our 2nd home and I estimate about 7k in interest is paid each year. We also have about 30k equity in our 200k home. Advice is appreciated!  <response>: When the loan defaults, any unpaid balance becomes taxable income that year and you will pay a 10 penalty. 