I've been hanging around this forum since about 2012 or so... this is probably the 2nd, maybe 3rd serious transmission failure (if it indeed took a crap and died - we really don't know yet) that I remember reading about. I personally would have no qualms about a transmission fluid replacement at 144K miles... especially since Toyota recommends a fluid change at 120K anyway. I would not loose much sleep over this.

Are you certain they inspected the transmission range sensor? It would only throw a code if it was detecting 2 positions at once, but if it were just stuck in neutral...

As the 3rd video from @DougR stated, "before you get too carried away" let someone who knows what they are doing inspect your transmission. Not sure if that's the dealer, they seem to rely on fault codes and external visual. Those are both fine, but in your case no fault codes and I assume external visual reveals no shift cable problem, etc.
If it were mine, I would be, or a trusted garage would be, dropping the drive shafts and inspect, remove T-case and inspect, remove trans and inspect.
Then I would make my decision.

He said it engages park which would rule out cable or sensor stuck in neutral no? Would speed sensor do it? Agree someone should look closer than "well no codes so new transmission time".

This is a myth.

I have a 1999 K2500 Suburban 4wd with 6.5 diesel and it has the 4L80e transmission. Just changed the transmission at 232K miles as the the pump was showing signs of wear with delayed engagement, particularly in reverse during extreme cold weather. The 4L80e is known to go about 250K to 300K miles, but I did heavy towing with saltwater boats. Since I regularly drive off-road and trips back and forth between Montana and SoCal, I can't afford to have a transmission go down. So I replaced it over the winter. Also replaced the transfer case while the transmission was out. Also replaced the engine and transmission mounts with Energy Suspension black urethane mounts which made a world of difference in reducing vibration and noise (engine mounts were so bad the engine was resting on the frame).

Friends who had the 1500 Suburban with the 4L60e routinely had their transmissions go out around 90K to 100K miles and wondered how mine could go so long. The difference is that the 4L80e is a much more robust transmission than the 4L60e. Also, regularly changed fluid and filter at 30K and did a full flush using the transmission pump and lines at 100K. The issues guys see with transmissions is never changing the fluid and the filters. Has nothing to do with the next fluid change and everything to do with the fact that you've already cooked the transmission.

We have 290K miles on a 2014 4Runner SR5. I've done 2 full transmission fluid and filter changes and I use Valvoline Synthetic ATF. Never a single issue with the transmission, or the truck for that matter.

P.S. Toyota transmission fluid won't help with negligent care of the transmission.

This is an interesting issue. I would place the vehicle on jack stands or on a vehicle lift to get the tires off the ground and allowing a good view of the drive shafts. Watch the drive shafts when shifting and placing the vehicle in 4 wheel drive. If there's no rotation of the shafts, the problem is in the transfer case/transmission. If there's rotation of the drive shaft(s), you have a axle shaft or differential.

I've seen a few busted axle shafts over the years on various trucks that snapped fairly quietly but never made noise after the initial break.

I've built and rebuilt more than a few transmissions. Lots of Fords in particular...

Anyway, according to the tech it needs a new transmission. So assuming he's competent, he determined that there has been a failure internally. It could be a number of things. The only way to know definitively, is to take it out of the vehicle, and take the transmission apart. At that point it sounds like they feel it's easier/more cost effective, to just slap in a known good transmission.

If I were the OP, I'd ask how many transmissions the tech has built or rebuilt, and if I didn't like the answer, I'd look for a good transmission shop.

Update: Transmission shop I took it to has just informed me that the rear speed sensor in the transmission is not rotating and that he believes that the input shaft is the problem. I gave him permission to drop the tranny and take it down to the point of failure. Fingers crossed it is just the input shaft that somehow failed and didn’t mess anything else up. So depending on what comes of this I will have to do cost benefit analysis on whether buying a diff transmission or a just replacing what is broke and slapping it back in and praying for the best. Rebuilding it though seems like the most costly option.

Now we're getting somewhere!

Curious as to what happened then? I know I'm not the only person who has had tranny issues after changing fluid, so if it is a myth do you know what actually happens?

I dropped my 144K miles 4runner off today. The tech said if I'd have waited until 160K or more miles they would not do the trans flush/ fill. Made me even a bit more nervous. I guess I'll know soon enough if I made a mistake. Hopefully it drives A-OK.

OP give us an update on your situation when you know.

I’ve put about 50 miles on since getting the full transmission flush service at 144,000 miles. Shifts smoothly and quickly.
The only difference I can notice is it doesn’t downshift as readily as before when you gradually press down the accelerator.
OP I hope they’re able to fix your transmission without a huge bill.

After taking down front of transmission that shop showed me that my pump gear was sticking likely due to me running the transmission between filling increments of ATF to pump out of return lines. I did this at 2quart increments. He said it is likely that the pump drained the pan too quickly for me to fill during one of those increments and was enough to cause scarring in the pump gears which overtime got deeper and eventually sheared the pump gear off of the torque converter. So luckily no rebuild but will have to replace torque converter and pump along with various seals and o-rings totaling around 3,300 with parts & labor since they serviced my T-case before dropping the whole transmission to rule it out. My clutches looked great and everything else behind the pump so likely no damage to other parts further back in the transmission.

I advise pinning this post if someone knows an admin. Be very careful when draining and filling that you are replacing the exact amount and I would maybe recommend if flushing doing 1 quart at a time so as to be cautious of an issue like this. I am very lucky I went with a reputable shop with Master transmission technicians that are not BSing me about what was wrong and even let me come in to inspect the damaged parts myself. If you are in the Prescott AZ Yavapai county area it is Certified Transmissions on Iron Springs Rd.

Gosh I'm sorry for your trouble. I hope the fix goes well and doesn't cost an arm and a leg.
I too wanted to do the partial drain and refill type of fluid swap but was too nervous so I went with the dealership power/ higher pressure flush for $210.
That made me nervous too, but so far no issues after a few days of driving besides it seems to have tightened up the shifting a bit and it doesn't downshift quite as readily as before?

I was not there for this flush to see exactly how it was done, but the spec fluid capacity is 11.3 quarts. 2 quarts is not going to drain the system dry and the fact that it was pumping fluid out is proof of that. Plus, if done right, the pumping is very brief. Again, I was not there, but if done properly, hard to believe that was the cause of your damage.