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When Zoe (39) lost her job this year, she had an account balance of $35,000 in her 401(k). She also had an outstanding 401(k) plan

When Zoe (39) lost her job this year, she had an account balance of $35,000 in her 401(k). She also had an outstanding 401(k) plan loan of $5,000 secured by that balance. She made no after-tax contributions. If Zoe is unable to repay the loan and the loan amount is treated as a distribution, how much is subject to the early distribution penalty?

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