The company announced last week that its Metropolitan Life Insurance would sell the business, which has 300,000 participants and $7.5 billion of retirement plan assets, to
Great-West Life would also get some defined benefit plan business.
MetLife quit the large-plan 401(k) administration business four years ago.
Chris Breslin, a spokesman for the company, said it conducted a "thorough review" of the smaller-plan 401(k) business. "We looked at our market share, the business' impact on our future strategy, and the investments we would need to make in order to grow the business. That, combined with some compelling marketplace interest, made us decide to sell it."
Burt Greenwald, a Philadelphia fund consultant, said the decision reflects how hard it has become to make a meaningful profit in the business.
"Servicing small 401(k) accounts is not a profitable business," he said. "It's difficult to charge a sufficient fee to cover administrative expenses if there is a small number of accounts or small account balances." The deal, expected to close in the fourth quarter, would nearly double the number of plan participants in Great-West Life's 401(k) full-service business.
