If your loan is not fully repaid within five years, it is considered in default, and TRS would ask you to make a lump-sum repayment within 30 days. If you do not repay the amount within 30 days, the loan would become a taxable distribution and would be reported to the IRS. If you are not in active service, your loan would also go into default after you miss three scheduled monthly payments or, if you are a Tier I or II member with a QPP loan, after you miss one quarterly payment. If a TDA loan goes into default, tax consequences may include an IRS-imposed 10% penalty and an additional 20% withholding applied to any TDA funds you receive later that year.