diff --git a/collects/racket/private/kw.rkt b/collects/racket/private/kw.rkt
index baba304f3b..ea9e0fe361 100644
--- a/collects/racket/private/kw.rkt
+++ b/collects/racket/private/kw.rkt
@@ -1061,7 +1061,9 @@
                                                 #,@(if rest?
                                                        #`((list #,@(list-tail args (min (length args) (+ n-req n-opt)))))
                                                        null))
-                                               #,(quasisyntax/loc stx (#%app #,wrap-id . #,args))))))))
+                                               #,(if lifted?
+                                                     orig
+                                                     (quasisyntax/loc stx (#%app #,wrap-id . #,args)))))))))
                                 orig))))
                 (datum->syntax stx (cons wrap-id #'(arg ...)) stx stx)))]
          [_ wrap-id]))))
diff --git a/collects/tests/racket/procs.rktl b/collects/tests/racket/procs.rktl
index 79cf9a42c4..4eff6c8c32 100644
--- a/collects/tests/racket/procs.rktl
+++ b/collects/tests/racket/procs.rktl
@@ -278,6 +278,11 @@
   (set! f (lambda (#:y y) (box y)))
   (test (box 8) (lambda () (f #:y 8))))
 
+(let ()
+  (define (f #:x [x 1]) x)
+  (test 7 (lambda () (f #:x 7)))
+  (set! f #f))
+
 ;; ----------------------------------------
 
 (report-errs)