401k Loan Interest

Jacksonville, FL

I borrowed $10,000 from my 401k plan to put a down payment on my current home and pay off some debts. I was told by my plan administrator that I would lose nothing, because I was borrowing money from myself. She also explained the interest charged would also be paid to myself (back to my 401k account).

I have now paid a total of $3,700 in payments and my outstanding balance is still $8,900. I've asked my administrator and the company managing my account - Manulife what happened to the $2,600 difference. No one can give me a satisfactory answer.

My question - Is my 401k loan being mishandled and should I pursue a lawyer?

You should have received a loan amortization schedule at the time of your loan. Also, a promissory note should have been included spelling out your terms and conditions. That schedule would detail exactly when each payment is made and how is applied to principle/interest. Request a copy of this schedule from your plan adm ASAP. From what you told me, it definitely does not sound correct.