For $725 a year you can subscribe to the ASPPA’s “ERISA Online Book” (EOB). I found this quote from someone who does:

From the EOB, "If the participant has an outstanding loan at the time of death, the participant's death will usually result in an offset of the unpaid balance against the accrued benefit. The participant (or the participant's estate), not the beneficiary, will be liable for any taxes resulting from that offset, because the beneficiary is not a party to the loan agreement. The tax liability might be reported on the participant's final income tax return or on the estate's income tax return."

Above from EOB Chapter 7, Section XIV Part I