It depends on the requirements of your 401(k) plan. Some 401(k) plans allow you to continue to make payments on loans after you leave your job. Others require you to pay back loans within a certain number of days (often 30, 60 or 90) after you leave, or the loan will become a distribution.

If you have the money and want to pay back the loan, you can call the 401(k) administrator to find out where to send the check. The administrator should also be able to tell you about how the loan can be repaid - if it is within a certain time period, or if it can be over the original life of the loan.

If the loan becomes a distribution, you will owe your marginal tax rate plus a 10% penalty, when you file your taxes for the year the loan was determined to be a distribution. On $12k, if you are in the 25% bracket, you will owe $4200 in taxes. If you do not have enough withheld from your paycheck to cover the additional taxes, you could end up owing penalties for underwithholding, so it would probably be best for you to update your W-4 to have additional tax withheld.

aj485 has it right...only thing I would add is that your new job may allow a loan rollover. It's not well publicized but it's legal to do. That would keep you from owing taxes...you'd simply start making payments at new plan (you'd also have to make up missed payments!). If you cash out the rest you'll actually only receive 21k. They'll withhold 20% of the entire 42k or 8,400. In addition you'd owe a 10% penalty on entire 42k so your tax bill will be 12k or so. That's on top of your normal taxes. Not a pretty picture! That's not considering the 300k damage you'll be doing to your retirement...10k distribution for a 20 something is a 100k reduction in retirement savings.

You get the option to leve it there or move it with you. You may also close it out and get a penalty or put it in an IRA. You have the choice, your past job will let you know.