diff --git a/plugins/kotlin/refactorings/kotlin.refactorings.move.k2/src/org/jetbrains/kotlin/idea/k2/refactoring/move/ui/K2MoveModel.kt b/plugins/kotlin/refactorings/kotlin.refactorings.move.k2/src/org/jetbrains/kotlin/idea/k2/refactoring/move/ui/K2MoveModel.kt
index 145c821db71a..1cb6cb30acd7 100644
--- a/plugins/kotlin/refactorings/kotlin.refactorings.move.k2/src/org/jetbrains/kotlin/idea/k2/refactoring/move/ui/K2MoveModel.kt
+++ b/plugins/kotlin/refactorings/kotlin.refactorings.move.k2/src/org/jetbrains/kotlin/idea/k2/refactoring/move/ui/K2MoveModel.kt
@@ -287,6 +287,15 @@ sealed class K2MoveModel {
                 }
             }
 
+            fun sourceFileName(): String {
+                val firstElem = elementsToMove.firstOrNull() as KtElement
+                return when (firstElem) {
+                    is KtFile -> firstElem.name
+                    is KtNamedDeclaration -> "${firstElem.name}.${KotlinLanguage.INSTANCE.associatedFileType?.defaultExtension}"
+                    else -> error("Element to move should be a file or declaration")
+                }
+            }
+
             val inSourceRoot = inSourceRoot(elementsToMove)
             return when {
                 (elementsToMove.all { it is KtFile } && targetContainer is PsiDirectory)
@@ -311,16 +320,14 @@ sealed class K2MoveModel {
                     val targetFile = targetContainer?.containingFile
                     val target = if (targetFile is KtFile) {
                         K2MoveTargetModel.File(targetFile)
+                    } else if (targetContainer is PsiDirectory) {
+                        val pkg = targetContainer.getFqNameWithImplicitPrefixOrRoot()
+                        K2MoveTargetModel.File(sourceFileName(), pkg, targetContainer)
                     } else { // no default target is provided, happens when invoking refactoring via keyboard instead of drag-and-drop
                         val firstElem = elementsToMove.firstOrNull() as KtElement
-                        val fileName = when (firstElem) {
-                            is KtFile -> firstElem.name
-                            is KtNamedDeclaration -> "${firstElem.name}.${KotlinLanguage.INSTANCE.associatedFileType?.defaultExtension}"
-                            else -> error("Element to move should be a file or declaration")
-                        }
                         val containingFile = firstElem.containingKtFile
                         val psiDirectory = containingFile.containingDirectory ?: error("No directory found")
-                        K2MoveTargetModel.File(fileName, containingFile.packageFqName, psiDirectory)
+                        K2MoveTargetModel.File(sourceFileName(), containingFile.packageFqName, psiDirectory)
                     }
                     Declarations(project, source, target, inSourceRoot, moveCallBack)
                 }
diff --git a/plugins/kotlin/refactorings/kotlin.refactorings.move.k2/test/org/jetbrains/kotlin/idea/k2/refactoring/move/K2MoveModelTest.kt b/plugins/kotlin/refactorings/kotlin.refactorings.move.k2/test/org/jetbrains/kotlin/idea/k2/refactoring/move/K2MoveModelTest.kt
index 8b3ef8ad9be3..fbbc4dfa9b60 100644
--- a/plugins/kotlin/refactorings/kotlin.refactorings.move.k2/test/org/jetbrains/kotlin/idea/k2/refactoring/move/K2MoveModelTest.kt
+++ b/plugins/kotlin/refactorings/kotlin.refactorings.move.k2/test/org/jetbrains/kotlin/idea/k2/refactoring/move/K2MoveModelTest.kt
@@ -319,7 +319,7 @@ class K2MoveModelTest : KotlinLightCodeInsightFixtureTestCase() {
         val sourceElement = moveDeclarationsModel.source.elements.firstOrNull()
         assert(sourceElement is KtClass && sourceElement.name == "Bar")
         val targetElement = moveDeclarationsModel.target.pkgName
-        assertEquals("a", targetElement.asString())
+        assertEquals("b", targetElement.asString())
     }