diff --git a/artiq/compiler/ir.py b/artiq/compiler/ir.py
index 94679fd18..3a00c7335 100644
--- a/artiq/compiler/ir.py
+++ b/artiq/compiler/ir.py
@@ -292,7 +292,7 @@ class BasicBlock(NamedValue):
 
     def erase(self):
         # self.instructions is updated while iterating
-        for insn in list(self.instructions):
+        for insn in reversed(self.instructions):
             insn.erase()
         self.remove_from_parent()
         # Check this after erasing instructions in case the block
@@ -997,7 +997,8 @@ class Raise(Terminator):
         return self.operands[0]
 
     def exception_target(self):
-        return self.operands[1]
+        if len(self.operands) > 1:
+            return self.operands[1]
 
 class Invoke(Terminator):
     """
diff --git a/artiq/compiler/transforms/dead_code_eliminator.py b/artiq/compiler/transforms/dead_code_eliminator.py
index 1d4e08f6f..003b8561c 100644
--- a/artiq/compiler/transforms/dead_code_eliminator.py
+++ b/artiq/compiler/transforms/dead_code_eliminator.py
@@ -25,6 +25,10 @@ class DeadCodeEliminator:
                 use.remove_incoming_block(block)
                 if not any(use.operands):
                     self.remove_instruction(use)
+            elif isinstance(use, ir.SetLocal):
+                # Setting the target for `finally` resumption, e.g.
+                #   setlocal(.k) %v.4, label %try.doreturn
+                use.erase()
             else:
                 assert False
 
diff --git a/lit-test/test/integration/finally.py b/lit-test/test/integration/finally.py
new file mode 100644
index 000000000..376051e66
--- /dev/null
+++ b/lit-test/test/integration/finally.py
@@ -0,0 +1,64 @@
+# RUN: %python -m artiq.compiler.testbench.jit %s
+# RUN: %python %s
+# REQUIRES: exceptions
+
+def f():
+    while True:
+        try:
+            print("f-try")
+            break
+        finally:
+            print("f-finally")
+    print("f-out")
+
+# CHECK-L: f-try
+# CHECK-L: f-finally
+# CHECK-L: f-out
+f()
+
+def g():
+    x = True
+    while x:
+        try:
+            print("g-try")
+            x = False
+            continue
+        finally:
+            print("g-finally")
+    print("g-out")
+
+# CHECK-L: g-try
+# CHECK-L: g-finally
+# CHECK-L: g-out
+g()
+
+def h():
+    try:
+        print("h-try")
+        return 10
+    finally:
+        print("h-finally")
+    print("h-out")
+    return 20
+
+# CHECK-L: h-try
+# CHECK-L: h-finally
+# CHECK-NOT-L: h-out
+# CHECK-L: h 10
+print("h", h())
+
+def i():
+    try:
+        print("i-try")
+        return 10
+    finally:
+        print("i-finally")
+        return 30
+    print("i-out")
+    return 20
+
+# CHECK-L: i-try
+# CHECK-L: i-finally
+# CHECK-NOT-L: i-out
+# CHECK-L: i 30
+print("i", i())