diff --git a/compiler/backend/src/org/jetbrains/jet/codegen/ExpressionCodegen.java b/compiler/backend/src/org/jetbrains/jet/codegen/ExpressionCodegen.java
index a158b7ced1d..34d491c15f5 100644
--- a/compiler/backend/src/org/jetbrains/jet/codegen/ExpressionCodegen.java
+++ b/compiler/backend/src/org/jetbrains/jet/codegen/ExpressionCodegen.java
@@ -1528,6 +1528,15 @@ public class ExpressionCodegen extends JetVisitor<StackValue, StackValue> implem
         }
     }
 
+    private boolean hasFinallyBLocks() {
+        for (BlockStackElement element : blockStackElements) {
+            if (element instanceof FinallyBlockStackElement) {
+                return true;
+            }
+        }
+        return false;
+    }
+
     private void genFinallyBlockOrGoto(
             @Nullable FinallyBlockStackElement finallyBlockStackElement,
             @Nullable Label tryCatchBlockEnd
@@ -1566,7 +1575,14 @@ public class ExpressionCodegen extends JetVisitor<StackValue, StackValue> implem
         JetExpression returnedExpression = expression.getReturnedExpression();
         if (returnedExpression != null) {
             gen(returnedExpression, returnType);
-            doFinallyOnReturn();
+            boolean hasFinallyBLocks = hasFinallyBLocks();
+            if (hasFinallyBLocks) {
+                int returnValIndex = myFrameMap.enterTemp(returnType);
+                StackValue.local(returnValIndex, returnType).store(returnType, v);
+                doFinallyOnReturn();
+                StackValue.local(returnValIndex, returnType).put(returnType, v);
+                myFrameMap.leaveTemp(returnType);
+            }
             v.areturn(returnType);
         }
         else {
diff --git a/compiler/testData/codegen/box/finally/kt3706.kt b/compiler/testData/codegen/box/finally/kt3706.kt
new file mode 100644
index 00000000000..923e3aa045a
--- /dev/null
+++ b/compiler/testData/codegen/box/finally/kt3706.kt
@@ -0,0 +1,16 @@
+fun f(): Int {
+    try {
+        return 0
+    }
+    finally {
+        try { // culprit ?? remove this try-catch and it works.
+        } catch (ignore: Exception) {
+        }
+    }
+}
+
+fun box(): String {
+    if (f() != 0)  return "fail1"
+
+    return "OK"
+}
\ No newline at end of file
diff --git a/compiler/testData/codegen/box/finally/kt4134.kt b/compiler/testData/codegen/box/finally/kt4134.kt
new file mode 100644
index 00000000000..24e4750d089
--- /dev/null
+++ b/compiler/testData/codegen/box/finally/kt4134.kt
@@ -0,0 +1,15 @@
+fun <T, R> io(s: R, a: (R) -> T): T {
+    try {
+        return a(s)
+    } finally {
+        try {
+            s.toString()
+        } catch(e: Exception) {
+            //NOP
+        }
+    }
+}
+
+fun box() : String {
+    return io(("OK"), {it})
+}
\ No newline at end of file
diff --git a/compiler/tests/org/jetbrains/jet/codegen/generated/BlackBoxCodegenTestGenerated.java b/compiler/tests/org/jetbrains/jet/codegen/generated/BlackBoxCodegenTestGenerated.java
index 79c112ba1b6..6ded8f412dc 100644
--- a/compiler/tests/org/jetbrains/jet/codegen/generated/BlackBoxCodegenTestGenerated.java
+++ b/compiler/tests/org/jetbrains/jet/codegen/generated/BlackBoxCodegenTestGenerated.java
@@ -2544,6 +2544,11 @@ public class BlackBoxCodegenTestGenerated extends AbstractBlackBoxCodegenTest {
             doTest("compiler/testData/codegen/box/finally/kt3549.kt");
         }
         
+        @TestMetadata("kt3706.kt")
+        public void testKt3706() throws Exception {
+            doTest("compiler/testData/codegen/box/finally/kt3706.kt");
+        }
+        
         @TestMetadata("kt3867.kt")
         public void testKt3867() throws Exception {
             doTest("compiler/testData/codegen/box/finally/kt3867.kt");
@@ -2559,6 +2564,11 @@ public class BlackBoxCodegenTestGenerated extends AbstractBlackBoxCodegenTest {
             doTest("compiler/testData/codegen/box/finally/kt3894.kt");
         }
         
+        @TestMetadata("kt4134.kt")
+        public void testKt4134() throws Exception {
+            doTest("compiler/testData/codegen/box/finally/kt4134.kt");
+        }
+        
         @TestMetadata("loopAndFinally.kt")
         public void testLoopAndFinally() throws Exception {
             doTest("compiler/testData/codegen/box/finally/loopAndFinally.kt");