CitiStreet provides record keeping and administrative services, advice programs and other benefit plan services primarily in the U.S. The company serves more than 16,000 plans and 12 million participants and has approximately 3,700 employees with the majority located in the U.S.

Earlier reports had pegged Bank of America as the most likely buyer of the benefits administrator.

But with the acquisition, ING vaults to near the top of the benefits services business. Indeed, the deal will make the Netherlands-based bank and insurer the third-largest defined-contribution service provider in the U.S., with $351 billion in assets under management and administration. After the deal, ING will serve 14 million defined-contribution plan participants.

The transaction also includes a defined-benefit/pension business in the U.S., a health and welfare business in the U.S. and a retirement services business in Australia.

ING indicated the deal will provide “significant operational synergies.” The bank expects the acquisition to be earnings-per-share accretive by 2010, excluding merger-related expenses and the amortization of customer-based intangible assets.

The purchase will be financed entirely from ING’s existing internal resources. The company’s management said the proposed acquisition will have no impact on ING’s ongoing share buy-back program.

The transaction is expected to close during the third quarter.

Filed by John Goff of Financial Week, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.