diff --git a/idea/idea-analysis/src/org/jetbrains/kotlin/idea/facet/KotlinVersionInfoProvider.kt b/idea/idea-analysis/src/org/jetbrains/kotlin/idea/facet/KotlinVersionInfoProvider.kt
index 4f5db32620e..ff4a541459a 100644
--- a/idea/idea-analysis/src/org/jetbrains/kotlin/idea/facet/KotlinVersionInfoProvider.kt
+++ b/idea/idea-analysis/src/org/jetbrains/kotlin/idea/facet/KotlinVersionInfoProvider.kt
@@ -52,20 +52,24 @@ fun getRuntimeLibraryVersions(
 fun getLibraryLanguageLevel(
         module: Module,
         rootModel: ModuleRootModel?,
-        targetPlatform: TargetPlatformKind<*>?
+        targetPlatform: TargetPlatformKind<*>?,
+        coerceRuntimeLibraryVersionToReleased: Boolean = true
 ): LanguageVersion {
-    val minVersion = (getRuntimeLibraryVersions(module, rootModel, targetPlatform ?: TargetPlatformKind.DEFAULT_PLATFORM) +
-            VersionView.RELEASED_VERSION.versionString).minWith(VersionComparatorUtil.COMPARATOR)
-    return getDefaultLanguageLevel(module, minVersion)
+    val minVersion = getRuntimeLibraryVersions(module, rootModel, targetPlatform ?: TargetPlatformKind.DEFAULT_PLATFORM)
+        .addReleaseVersionIfNecessary(coerceRuntimeLibraryVersionToReleased)
+        .minWith(VersionComparatorUtil.COMPARATOR)
+    return getDefaultLanguageLevel(module, minVersion, coerceRuntimeLibraryVersionToReleased)
 }
 
 fun getDefaultLanguageLevel(
         module: Module,
-        explicitVersion: String? = null
+        explicitVersion: String? = null,
+        coerceRuntimeLibraryVersionToReleased: Boolean = true
 ): LanguageVersion {
     val libVersion = explicitVersion
-                     ?: (KotlinVersionInfoProvider.EP_NAME.extensions
-                             .mapNotNull { it.getCompilerVersion(module) } + VersionView.RELEASED_VERSION.versionString)
+                     ?: KotlinVersionInfoProvider.EP_NAME.extensions
+                             .mapNotNull { it.getCompilerVersion(module) }
+                             .addReleaseVersionIfNecessary(coerceRuntimeLibraryVersionToReleased)
                              .minWith(VersionComparatorUtil.COMPARATOR)
                      ?: return VersionView.RELEASED_VERSION
     return when {
@@ -77,6 +81,9 @@ fun getDefaultLanguageLevel(
     }
 }
 
+private fun Iterable<String>.addReleaseVersionIfNecessary(shouldAdd: Boolean): Iterable<String> =
+    if (shouldAdd) this + VersionView.RELEASED_VERSION.versionString else this
+
 fun getRuntimeLibraryVersion(module: Module): String? {
     val targetPlatform = KotlinFacetSettingsProvider.getInstance(module.project).getInitializedSettings(module).targetPlatformKind
     val versions = getRuntimeLibraryVersions(module, null, targetPlatform ?: TargetPlatformKind.DEFAULT_PLATFORM)
diff --git a/idea/src/org/jetbrains/kotlin/idea/facet/facetUtils.kt b/idea/src/org/jetbrains/kotlin/idea/facet/facetUtils.kt
index 7228b69b99f..8690cba8947 100644
--- a/idea/src/org/jetbrains/kotlin/idea/facet/facetUtils.kt
+++ b/idea/src/org/jetbrains/kotlin/idea/facet/facetUtils.kt
@@ -82,14 +82,21 @@ fun KotlinFacetSettings.initializeIfNeeded(
 
     if (shouldInferLanguageLevel) {
         languageLevel = (if (useProjectSettings) LanguageVersion.fromVersionString(commonArguments.languageVersion) else null)
-                ?: getDefaultLanguageLevel(module, compilerVersion)
+                ?: getDefaultLanguageLevel(module, compilerVersion, coerceRuntimeLibraryVersionToReleased = compilerVersion == null)
     }
 
     if (shouldInferAPILevel) {
         apiLevel = if (useProjectSettings) {
             LanguageVersion.fromVersionString(commonArguments.apiVersion) ?: languageLevel
         } else {
-            languageLevel!!.coerceAtMost(getLibraryLanguageLevel(module, rootModel, targetPlatformKind))
+            languageLevel!!.coerceAtMost(
+                getLibraryLanguageLevel(
+                    module,
+                    rootModel,
+                    targetPlatformKind,
+                    coerceRuntimeLibraryVersionToReleased = compilerVersion == null
+                )
+            )
         }
     }
 }