The IRS is studying cafeteria plans that let workers set aside pre-tax money for medical bills, dependent care or for contributions to 401(k) plans, and might take enforcement action against companies that fail to comply with tax rules. The IRS has noticed many companies might not be filing Form 5500s or might not have written documents detailing how the plans work. There also is ``tremendous confusion'' about how employers must calculate the cost of the plans, said Abba Rabbani, cafeteria plan industry specialist in the IRS' Dallas office, who is heading the study. ``That appears to be wrong nine out of 10 times,'' he said.
While the combined assets of U.S. mutual funds increased to $3.7 trillion in April, the Investment Company Institute reported new net cash flow to the whole fund industry was -$5.8 billion. By contrast, new net cash in March was $10 billion. The ICI attributed the drop to outflows from money market funds. The ICI also reported inflows to stock mutual funds were down 25% to $73.3 billion for the first four months of 1997, compared with $99 billion for the same period in 1996. Bond and income mutual funds saw a 46% drop in inflows in the first four months of 1997.
Michael Price will launch his latest mutual fund, the Franklin Financial Services Fund, in the third quarter. The new fund will invest in banks, thrifts, loan and mortgage companies, a sector in which Mr. Price has had some past successes. Mr. Price and his team manage $23 billion in the Franklin Mutual family now.
Oregon Public Employes' Retirement Fund Wednesday terminated Barings Asset Management and Decision Services Inc. as international equity managers. Barings managed $300 million and DSI managed about $283 million for the $25 billion fund.
Chris Hensel, consultant with Frank Russell Co., said Barings has suffered ``significant'' turnover, and DSI was suspect for ``the quality and depth of its research.'' The money will be put temporarily in an EAFE index fund run by Barclays Global.
The Oregon Investment Council also put Cursitor-Eaton on a ``watch list'' in hopes it can sustain a recent turnaround in performance. Russell and Wilshire assisted.
Police & Firemen's Insurance Association, Carmel, Ind., is searching for a second outside manager for its $47 million insurance fund. The association is looking at a list of candidates with help from consultant Smith Barney. A new manager will handle $2 million in domestic equities and is expected to be hired in July, said Jeff Wellner, vice president and treasurer.