From apple discussions:
I too was under the mistaken belief that I would be able to turn off encryption the same place that I turned it on. This cannot be done from within Time Machine (at least not in OS X 10.9) – you need to do it from within the Disk Utility:
Open Disk Utility
Select the backup disk
File > Turn Off Encryption…
Enter the password for your encrypted disk
This will turn off encryption for your backup disk, and decrypt the data that is currently encrypted.