diff --git a/pkgs/compiler-test/tests/compiler/embed/embed-me31.rkt b/pkgs/compiler-test/tests/compiler/embed/embed-me31.rkt
new file mode 100644
index 0000000000..59e4077f0e
--- /dev/null
+++ b/pkgs/compiler-test/tests/compiler/embed/embed-me31.rkt
@@ -0,0 +1,16 @@
+#lang racket/base
+
+;; check that `declare-preserve-for-embedding` works
+
+(module keep-me racket/base
+  (module declare-preserve-for-embedding racket/base)
+  (define kept "This is 31.\n")
+  (provide kept))
+
+(display
+ (dynamic-require (module-path-index-join
+                   '(submod "." keep-me)
+                   (variable-reference->module-path-index
+                    (#%variable-reference)))
+                  'kept))
+
diff --git a/pkgs/compiler-test/tests/compiler/embed/test.rkt b/pkgs/compiler-test/tests/compiler/embed/test.rkt
index 0d58da0c69..84a101e9f5 100644
--- a/pkgs/compiler-test/tests/compiler/embed/test.rkt
+++ b/pkgs/compiler-test/tests/compiler/embed/test.rkt
@@ -265,7 +265,8 @@
     (one-mz-test "embed-me17.rkt" "This is 17.\n" #f)
     (one-mz-test "embed-me18.rkt" "This is 18.\n" #f)
     (one-mz-test "embed-me19.rkt" "This is 19.\n" #f)
-    (one-mz-test "embed-me21.rkt" "This is 21.\n" #f))
+    (one-mz-test "embed-me21.rkt" "This is 21.\n" #f)
+    (one-mz-test "embed-me31.rkt" "This is 31.\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 53aade8836..c398782e1b 100644
--- a/racket/collects/compiler/embed.rkt
+++ b/racket/collects/compiler/embed.rkt
@@ -620,7 +620,9 @@
                                     (if (is-lib-path? module-path)
                                         ;; Preserve `lib`-ness of module reference:
                                         (collapse-module-path-index
-                                         (module-path-index-join mp module-path))
+                                         (module-path-index-join
+                                          mp
+                                          (module-path-index-join module-path #f)))
                                         ;; Ok to collapse based on filename:
                                         (collapse-module-path-index mpi filename))
                                     m))