That is true. If, heaven forbid, I lose my job though, doesn't the 401k loan come due immediately?
I think you have a period of default above and beyond missing one payment, and if you remain in default, you get a tax bill on the unpaid balance.
Yes, it comes due. If you can't pay it back, you will have to pay the tax.
You didn't say how much credit card debt you have and why. If you pay your credit card debt with your retirement account(s), and you rack up the credit cards again, you'll be in a worse place than you are now.
You might want to consider quitting depositing anything into your 401(k) and taking that money and use it to slowly pay down the credit card debt.
If it were me, I'd cut up the credit cards, no more charging ANYTHING. I'd pay down my credit card debt over time but as quickly as possible by cutting down on spending, i.e., cut out any Starbucks, stop the newspaper, cut out the bottled water, make your own lunches, stuff like that. If possible, I would also get a part-time job to help get the credit card paid down. I would also quit paying into the 401(k) and use that money to pay down my debt but I'd leave what's in my 401(k) alone. I might be sorry I did this in the future, but as things stand now, and with the information I have now, I don't think I'd be putting my money into retirement when the way things look now, the government is just going to steal it from me anyway. This is what I'd do. Only you know your situation. If you've got $25,000 in credit card debt (heaven forbid) and you're paying $750/mo in interest, that's another story and yes, I'd empty the 401(k) to wipe that out. However, if you have that much credit card debt, you've got a spending problem and it doesn't much matter what you do.