Normally when you take a loan out of your 401K, there is a payment schedule to payback your 401K loan. This can vary depending on why the loan was taken out and your employers own criteria. Having said that, most 401K loans are expected to be paid back in five years using an installment method of wage garnishing by your employer.

You can also have the option of paying back your 401K loan via a lump sum method. According to your question, you have taken out $18000 and are now deciding whether to pay off a portion of it using your tax refund of $2000 or just to wait on it and pay a the tax on the loan.

Keep in mind if you are under 59.5 years of age, there will also be a tax penalty of ten percent because if you default on the loan it is considered a cash withdrawal. This is in addition to the normal tax on it as it is considered income if you are in default.

It is best for you to pay back your loan according to an installment if you had one set up or as soon as you can if you are in default. The reason is that your 401K's real purpose is to take care off you when you are retired.

The money you have taken out could be growing and helping to produce your nest egg. Over time, the money you take out can have a large effect on the final amount of your 401K at retirement. My advice is to pay it back as soon as you have the money.

If you have trouble paying back your 401K, then talk with your employer to work out a suitable installment arrangement.

The thing about it is i quit My job for a better job and now i have only 60 days to pay back the loan, I will have to call Monday to see if I can pay only The 2000 back into the 401k .If not I'll have to wait tell the end of the year and take the HIT.