You pay the interest back into your account. You repay both principal and interest payments, and the money goes back into your own account. But, exactly how much the rate is will depend on your specific plan. Repayment is easy. Most plans require your payments to come directly out of your paycheck, which makes it easy to repay the loan.
Most plans have a five-year window for repaying loans.
If you cannot repay the money, your loan will be considered in default and the outstanding balance would be treated as a taxable withdrawal. This scenario often forces individuals to cash in more of their plan assets to make these payments, and that amount is also subject to taxes and a possible penalty. Although you are being charged a reasonable rate to borrow, you may be short-changing yourself. Of course, no one can predict whether or not the past history of the stock market will repeat itself, but you get the idea. Some plans may charge fees when you borrow from your account.