The biggest difference between a Hardship Withdrawal and a loan is whether or not they are taxed and whether or not they must be paid back. If distributed before the age of 65, hardship withdrawals will likely be taxed at a 10% rate. They are also not required to be paid back at any time. This is different from a retirement plan loan. 401(k)s, 401(b), and 457(b) plans may offer loan services but are not required under law. A loan will not be taxed if the repayment schedule is followed. However, unlike a hardship withdrawal, repayment is required usually within 5 years.