What it is
Many plans require the loan to be repaid, or offset against the balance, at separation. An offset is treated as a distribution: the plan reports it to the IRS, and the amount not rolled over is taxed, plus a 10% penalty if you are under 59.5. Most plans allow a 60-day window to roll the offset to an IRA.
What to do about it: Ask for the offset date in writing. The 60-day rollover window runs from the offset, not from your last day, and missing it turns the offset into a taxable distribution.
Plain-language description of US practice, not legal, tax, or financial advice. The paired guide carries the citations, dates, and thresholds; the state pages carry the local windows.