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The short answer
Possibly, and there is no simple answer. With no US-Nigeria income tax treaty, an RSA gets no treaty protection, so it is analysed under general rules such as section 402(b) for nonexempt employees' trusts: employer contributions are included in income under section 83 and distributions are taxed under section 72. Whether yearly growth is taxed before you draw it depends on how the RSA is classified and on your facts; we found no IRS guidance specific to Nigerian RSAs, so get a preparer's view and report the account on Form 8938 where thresholds are met.
Why there is no easy answer
US 401(k)s and IRAs grow tax-deferred because US law qualifies them. A foreign pension gets similar treatment only if a tax treaty provides it. The IRS list of US income tax treaties includes, in Africa, Egypt, Morocco, South Africa and Tunisia; Nigeria is not on it (reviewed January 2026). So your RSA is, for US purposes, a foreign arrangement with no special status, and the question is which general rule applies. Nigerian law is clear on its own side: pension fund income under the Pension Reform Act is exempt in Nigeria (Mondaq, January 2026). That does not bind the US.
The section 402(b) framework
Many practitioners analyse foreign employer pension plans as "nonexempt employees' trusts" under section 402(b) of the Internal Revenue Code. The statute says:
- Employer contributions to an employees' trust that is not tax-exempt "shall be included in the gross income of the employee in accordance with section 83", using the value of the employee's interest in the trust (s.402(b)(1)). Section 83 generally looks at when the interest becomes vested.
- Distributions are taxable to the recipient in the year distributed or made available, under the annuity rules of section 72 (s.402(b)(2)).
- Highly compensated employees: where the plan is not exempt because it fails certain US coverage tests, a highly compensated employee includes in income each year the vested accrued benefit, other than their own investment in the contract (s.402(b)(4)).
Under this framework, for most people the yearly investment growth inside the RSA is not taxed until distribution, unless the highly compensated employee rule applies, but employer contributions made while you are a US person may be taxable when vested. Your own employee contributions are after-tax "investment in the contract" for US purposes, which reduces the taxable part of later distributions.
Other views
Some advisers argue that part of a foreign pension can be treated as a foreign grantor trust, with income taxed to you yearly, or raise questions about the funds the RSA invests in. We found no IRS ruling or guidance that settles how a Nigerian RSA is treated. This is exactly where a preparer who handles foreign pensions earns their fee; ask them to state in writing which treatment they apply and why.
Contributions made before you became a US person
If you built the RSA while living in Nigeria and then moved, the employer contributions were made before you were a US taxpayer. The analysis of those amounts, and of growth on them, may differ from contributions made after you arrived. Keep a statement showing the balance on the date you became a US resident; it is the starting point for any later calculation.
Worked example (illustrative)
Ada moved to the US with an RSA of ₦8,000,000. Over the next year it grows by ₦1,200,000 from investment returns; no contributions are made. At an example average rate of ₦1,500 to $1, the growth is $800. Under the 402(b) reading for a non-highly compensated employee, that $800 is not reported as income that year; it becomes part of later distributions taxed under section 72. Under a grantor-trust reading, she might report it yearly. If she is in the 22% bracket, the difference is $176 a year in federal tax. Figures and the bracket are examples.
What you must report regardless
| Report | What the IRS material says |
|---|---|
| Form 8938 | Report your interest in a foreign pension plan in Part VI; do not separately report the plan's assets (Form 8938 instructions). Thresholds for a single filer in the US: more than $50,000 at year-end or $75,000 at any time |
| Value on Form 8938 | Fair market value of your interest; if not known, a maximum based on distributions received in the year, or zero if none (Form 8938 instructions) |
| FBAR | Whether an RSA is a reportable foreign financial account is covered in our separate guide |
| Distributions | Taxable under section 72 when paid or made available |
See is a Nigerian RSA reportable on the FBAR? and, for what to do with the account itself, your RSA while living in the US. If you may go home later, planning retirement when you may return weighs the choices.
Records to keep
- RSA statement at the date you became a US resident.
- Annual statements showing contributions (employer and employee), returns and fees.
- Any withdrawal confirmations, with dates and naira amounts.
- Exchange rates used, with source, applied consistently.
Where Pryme fits
Pryme is not a PFA and does not give tax advice. When RSA benefits are eventually paid in naira, a Pryme account opened from the US can receive them on naira details and convert to dollars when you choose with Swap, with the rate and fee shown before you approve, which gives you a dated record. See multicurrency accounts and verifiable statements.
Questions people ask
Is my Nigerian pension growth taxable in the US?
It depends on how the RSA is classified. Under a common section 402(b) reading, growth is usually taxed on distribution, but other readings exist and there is no IRS guidance specific to RSAs.
Does the US-Nigeria tax treaty protect my RSA?
There is no US income tax treaty with Nigeria on the IRS list, so no treaty protection applies.
Do I report my RSA on Form 8938?
Yes, if your specified foreign financial assets exceed the thresholds; report your interest in the foreign pension plan in Part VI.
Are RSA withdrawals taxed in the US?
Yes for US persons, generally under the annuity rules of section 72, with your own after-tax contributions reducing the taxable part.
Sources
- IRS: United States income tax treaties, A to Z (reviewed 3 Jan 2026) · accessed Oct 2026
- 26 U.S. Code s.402, Taxability of beneficiary of employees' trust (Cornell LII) · accessed Oct 2026
- IRS: Instructions for Form 8938 (continuous use) · accessed Oct 2026
- IRS: Basic questions and answers on Form 8938 (reviewed 17 Aug 2026) · accessed Oct 2026
- Mondaq (Adeola Oyinlade & Co): Understanding personal income tax under the Nigeria Tax Act 2025 (5 Jan 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.