diff --git a/base/compiler/abstractinterpretation.jl b/base/compiler/abstractinterpretation.jl
index 78dc74f4d30a3..82035070ac2c9 100644
--- a/base/compiler/abstractinterpretation.jl
+++ b/base/compiler/abstractinterpretation.jl
@@ -204,9 +204,7 @@ function abstract_call_gf_by_type(interp::AbstractInterpreter, @nospecialize(f),
     if seen ≠ napplicable
         # there is unanalyzed candidate, widen type and effects to the top
         rettype = Any
-        # there may be unanalyzed effects within unseen dispatch candidate,
-        # but we can still ignore nonoverlayed effect here since we already accounted for it
-        all_effects = merge_effects(all_effects, EFFECTS_UNKNOWN)
+        all_effects = Effects()
     elseif isa(matches, MethodMatches) ? (!matches.fullmatch || any_ambig(matches)) :
             (!all(matches.fullmatches) || any_ambig(matches))
         # Account for the fact that we may encounter a MethodError with a non-covered or ambiguous signature.
diff --git a/test/compiler/AbstractInterpreter.jl b/test/compiler/AbstractInterpreter.jl
index cfb26d714db9f..e20d328ccbdb6 100644
--- a/test/compiler/AbstractInterpreter.jl
+++ b/test/compiler/AbstractInterpreter.jl
@@ -45,6 +45,14 @@ import Base.Experimental: @MethodTable, @overlay
 @MethodTable(OverlayedMT)
 CC.method_table(interp::MTOverlayInterp) = CC.OverlayMethodTable(CC.get_world_counter(interp), OverlayedMT)
 
+function CC.add_remark!(interp::MTOverlayInterp, ::CC.InferenceState, remark)
+    if interp.meta !== nothing
+        # Core.println(remark)
+        push!(interp.meta, remark)
+    end
+    return nothing
+end
+
 strangesin(x) = sin(x)
 @overlay OverlayedMT strangesin(x::Float64) = iszero(x) ? nothing : cos(x)
 
@@ -64,6 +72,21 @@ end |> !Core.Compiler.is_nonoverlayed
     @invoke strangesin(x::Float64)
 end |> !Core.Compiler.is_nonoverlayed
 
+# account for overlay possibility in unanalyzed matching method
+callstrange(::Nothing) = Core.compilerbarrier(:type, nothing) # trigger inference bail out
+callstrange(::Float64) = strangesin(x)
+callstrange_entry(x) = callstrange(x) # needs to be defined here because of world age
+let interp = MTOverlayInterp(; meta=Set{Any}())
+    matches = Core.Compiler.findall(Tuple{typeof(callstrange),Any}, Core.Compiler.method_table(interp)).matches
+    @test Core.Compiler.length(matches) == 2
+    if Core.Compiler.getindex(matches, 1).method == which(callstrange, (Nothing,))
+        @test Base.infer_effects(callstrange_entry, (Any,); interp) |> !Core.Compiler.is_nonoverlayed
+        @test "Call inference reached maximally imprecise information. Bailing on." in interp.meta
+    else
+        @warn "`nonoverlayed` test for inference bailing out is skipped since the method match sort order is changed."
+    end
+end
+
 # but it should never apply for the native compilation
 @test Base.infer_effects((Float64,)) do x
     strangesin(x)