diff --git a/spring-batch-core/src/main/java/org/springframework/batch/core/step/item/ItemOrientedStep.java b/spring-batch-core/src/main/java/org/springframework/batch/core/step/item/ItemOrientedStep.java
index 52fd2ff52..ea6b9d5cc 100644
--- a/spring-batch-core/src/main/java/org/springframework/batch/core/step/item/ItemOrientedStep.java
+++ b/spring-batch-core/src/main/java/org/springframework/batch/core/step/item/ItemOrientedStep.java
@@ -286,37 +286,9 @@ public class ItemOrientedStep extends AbstractStep {
 
 					// Attempt to flush before the step execution and stream
 					// state are updated
-					try {
-						itemHandler.flush();
-					}
-					catch (Error e) {
-						if (transactionAttribute.rollbackOn(e)) {
-							throw e;
-						}
-						nonRollbackException = e;
-					}
-					catch (Exception e) {
-						if (transactionAttribute.rollbackOn(e)) {
-							throw e;
-						}
-						nonRollbackException = e;
-					}
+					itemHandler.flush();
 
-					try {
-						stream.update(stepExecution.getExecutionContext());
-					}
-					catch (Error e) {
-						if (transactionAttribute.rollbackOn(e)) {
-							throw e;
-						}
-						nonRollbackException = e;
-					}
-					catch (Exception e) {
-						if (transactionAttribute.rollbackOn(e)) {
-							throw e;
-						}
-						nonRollbackException = e;
-					}
+					stream.update(stepExecution.getExecutionContext());
 
 					try {
 						getJobRepository().saveOrUpdateExecutionContext(stepExecution);
@@ -408,7 +380,22 @@ public class ItemOrientedStep extends AbstractStep {
 				}
 				// check for interruption before each item as well
 				interruptionPolicy.checkInterrupted(execution);
-				ExitStatus exitStatus = itemHandler.handle(contribution);
+				ExitStatus exitStatus = ExitStatus.FINISHED;
+				
+				try{
+					exitStatus = itemHandler.handle(contribution);
+				}
+				catch (Error e) {
+					if (transactionAttribute.rollbackOn(e)) {
+						throw e;
+					}
+				}
+				catch (Exception e) {
+					if (transactionAttribute.rollbackOn(e)) {
+						throw e;
+					}
+				}
+				
 				// check for interruption after each item as well
 				interruptionPolicy.checkInterrupted(execution);
 				return exitStatus;
diff --git a/spring-batch-core/src/test/java/org/springframework/batch/core/step/item/ItemOrientedStepTests.java b/spring-batch-core/src/test/java/org/springframework/batch/core/step/item/ItemOrientedStepTests.java
index e2f0f92de..779f18113 100644
--- a/spring-batch-core/src/test/java/org/springframework/batch/core/step/item/ItemOrientedStepTests.java
+++ b/spring-batch-core/src/test/java/org/springframework/batch/core/step/item/ItemOrientedStepTests.java
@@ -841,35 +841,6 @@ public class ItemOrientedStepTests extends TestCase {
 		
 	}
 	
-	public void testNoRollbackOnHandlerException() throws Exception{
-		
-		final RuntimeException exception = new RuntimeException();
-		ItemReader itemReader = new AbstractItemReader() {
-			public Object read() throws Exception {
-				// Trigger a rollback
-				throw exception;
-			}
-		};
-		itemOrientedStep.setItemHandler(new SimpleItemHandler(itemReader, itemWriter));
-		itemOrientedStep.setTransactionAttribute(new NeverRollbackTransactionAttribute());
-		
-		JobExecution jobExecutionContext = new JobExecution(jobInstance);
-		StepExecution stepExecution = new StepExecution(itemOrientedStep.getName(), jobExecutionContext);
-
-		stepExecution.setExecutionContext(new ExecutionContext(PropertiesConverter.stringToProperties("foo=bar")));
-		// step.setLastExecution(stepExecution);
-
-		try {
-			itemOrientedStep.execute(stepExecution);
-			fail("Expected RuntimeException");
-		}
-		catch (RuntimeException ex) {
-			assertEquals(BatchStatus.FAILED, stepExecution.getStatus());
-			// The original rollback was caused by this one:
-			assertSame(exception, ex);
-		}
-	}
-	
 	public void testNoRollbackOnFlushException() throws Exception{
 		
 		final RuntimeException exception = new RuntimeException();