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Repay the loan, if you can.

You may not have to repay it as long as the money remains in your former employer's 401k.

If you can't repay the loan, but still want to roll it for whatever reason, you will pay a penalty of 10% on the $10,000, plus the $10,000 will be treated as ordinary income. That's a pretty big hit, so don't take it unless you are really sure that you will make more in the long run.

Good luck!
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