diff --git a/value/src/main/java/com/google/auto/value/processor/AutoBuilderProcessor.java b/value/src/main/java/com/google/auto/value/processor/AutoBuilderProcessor.java
index 0ff0a1dc21..dc61560698 100644
--- a/value/src/main/java/com/google/auto/value/processor/AutoBuilderProcessor.java
+++ b/value/src/main/java/com/google/auto/value/processor/AutoBuilderProcessor.java
@@ -324,7 +324,7 @@ private Property newProperty(
     return new Property(
         name,
         identifier,
-        TypeEncoder.encode(type),
+        TypeEncoder.encodeWithAnnotations(type),
         new AnnotatedTypeMirror(type),
         nullableAnnotation,
         nullables,
diff --git a/value/src/main/java/com/google/auto/value/processor/builder.vm b/value/src/main/java/com/google/auto/value/processor/builder.vm
index 30989b7843..ee0203bb40 100644
--- a/value/src/main/java/com/google/auto/value/processor/builder.vm
+++ b/value/src/main/java/com/google/auto/value/processor/builder.vm
@@ -43,7 +43,7 @@ ${builderClassModifiers}class ${builderName}${builderFormalTypes} ##
   private ${builderPropertyBuilders[$p.name].nullableBuilderType} ##
       ${builderPropertyBuilders[$p.name].name};
 
-    #end
+  #end
 
   private $p.builderFieldType $p $p.builderInitializer;
 
diff --git a/value/src/test/java/com/google/auto/value/processor/AutoBuilderCompilationTest.java b/value/src/test/java/com/google/auto/value/processor/AutoBuilderCompilationTest.java
index a850d171cb..016cfaa496 100644
--- a/value/src/test/java/com/google/auto/value/processor/AutoBuilderCompilationTest.java
+++ b/value/src/test/java/com/google/auto/value/processor/AutoBuilderCompilationTest.java
@@ -167,6 +167,42 @@ public void simpleRecord() {
         .hasSourceEquivalentTo(EXPECTED_SIMPLE_OUTPUT);
   }
 
+  @Test
+  public void recordWithNullableNestedComponentType() {
+    double version = Double.parseDouble(JAVA_SPECIFICATION_VERSION.value());
+    assume().that(version).isAtLeast(16.0);
+    JavaFileObject javaFileObject =
+        JavaFileObjects.forSourceLines(
+            "foo.bar.Baz",
+            "package foo.bar;",
+            "",
+            "import com.google.auto.value.AutoBuilder;",
+            "import org.checkerframework.checker.nullness.qual.Nullable;",
+            "",
+            "public record Baz(@Nullable Nested nested) {",
+            "  public static Builder builder() {",
+            "    return new AutoBuilder_Baz_Builder();",
+            "  }",
+            "",
+            "  @AutoBuilder",
+            "  public interface Builder {",
+            "    Builder setNested(Nested nested);",
+            "    Baz build();",
+            "  }",
+            "",
+            "  public record Nested() {}",
+            "}");
+    Compilation compilation =
+        javac()
+            .withProcessors(new AutoBuilderProcessor())
+            .withOptions("-A" + Nullables.NULLABLE_OPTION + "=org.checkerframework.checker.nullness.qual.Nullable")
+            .compile(javaFileObject);
+    assertThat(compilation)
+        .generatedSourceFile("foo.bar.AutoBuilder_Baz_Builder")
+        .contentsAsUtf8String()
+        .contains("private Baz.@Nullable Nested nested;");
+  }
+
   @Test
   public void buildOtherPackage() {
     JavaFileObject built =