Unless you pay by the 60 days, you will be subject to a penalty of 10% of the amount of the loan. It is called a penalty for early withdrawal, and it applies to most withdrawals of people who are under 59-1/2.

Also, if you do not repay the loan in the 60-day period, you have to pay income tax on the amount: it is taxable income.

(Reviewed 9-08)