diff --git a/pkgs/compiler-test/tests/compiler/embed/embed-me36.rkt b/pkgs/compiler-test/tests/compiler/embed/embed-me36.rkt
new file mode 100644
index 0000000000..644b107932
--- /dev/null
+++ b/pkgs/compiler-test/tests/compiler/embed/embed-me36.rkt
@@ -0,0 +1,9 @@
+#lang racket/base
+
+;; Make sure this module doesn't get compiled, because the intent is
+;; to test `raco exe` on the module in source form.
+
+(module sub racket/base
+  'ok-36)
+
+(require 'sub)
diff --git a/pkgs/compiler-test/tests/compiler/embed/info.rkt b/pkgs/compiler-test/tests/compiler/embed/info.rkt
index 618b4d7f48..a4ac9f29ee 100644
--- a/pkgs/compiler-test/tests/compiler/embed/info.rkt
+++ b/pkgs/compiler-test/tests/compiler/embed/info.rkt
@@ -11,7 +11,8 @@
                              "embed-bsla.rkt"
                              "embed-isl.rkt"
                              "embed-isll.rkt"
-                             "embed-asl.rkt"))
+                             "embed-asl.rkt"
+                             "embed-me36.rkt"))
 
 (define test-omit-paths '("embed-me9.rkt"
                           "embed-planet-1"
diff --git a/pkgs/compiler-test/tests/compiler/embed/test.rkt b/pkgs/compiler-test/tests/compiler/embed/test.rkt
index 01b00e69dc..e9c95ab96e 100644
--- a/pkgs/compiler-test/tests/compiler/embed/test.rkt
+++ b/pkgs/compiler-test/tests/compiler/embed/test.rkt
@@ -268,7 +268,8 @@
     (one-mz-test "embed-me21.rkt" "This is 21.\n" #f)
     (one-mz-test "embed-me31.rkt" "This is 31.\n" #f)
     (one-mz-test "embed-me34.rkt" "This is 34 in a second place.\n" #f)
-    (one-mz-test "embed-me35.rkt" "'ok-35\n" #f))
+    (one-mz-test "embed-me35.rkt" "'ok-35\n" #f)
+    (one-mz-test "embed-me36.rkt" "'ok-36\n" #f))
 
   ;; Try unicode expr and cmdline:
   (prepare dest "unicode")
diff --git a/racket/collects/compiler/embed.rkt b/racket/collects/compiler/embed.rkt
index 0dd41af3bb..6ad4dc27c5 100644
--- a/racket/collects/compiler/embed.rkt
+++ b/racket/collects/compiler/embed.rkt
@@ -543,12 +543,6 @@
                             ;; check for run-time paths by visiting the module in an
                             ;; expand-time namespace:
                             (parameterize ([current-namespace expand-namespace])
-                              (define no-submodule-code
-                                ;; Strip away submodules to avoid re-declaring them:
-                                (module-compiled-submodules 
-                                 (module-compiled-submodules code #f null)
-                                 #t
-                                 null))
                               (let ([module-path
                                      (if (path? module-path)
                                          (path->complete-path module-path)
@@ -558,7 +552,7 @@
                                                   (module-path-index-resolve (module-path-index-join
                                                                               module-path
                                                                               #f))])
-                                    (eval no-submodule-code)))
+                                    (eval code)))
                                 (define e (expand `(,#'module m racket/kernel
                                                      (#%require (only ,module-path)
                                                                 racket/runtime-path)