diff --git a/OMEdit/OMEditGUI/Modeling/LibraryTreeWidget.cpp b/OMEdit/OMEditGUI/Modeling/LibraryTreeWidget.cpp
index 65904039429..e3069ad8ead 100644
--- a/OMEdit/OMEditGUI/Modeling/LibraryTreeWidget.cpp
+++ b/OMEdit/OMEditGUI/Modeling/LibraryTreeWidget.cpp
@@ -341,11 +341,19 @@ LibraryTreeItem::LibraryTreeItem(LibraryType type, QString text, QString nameStr
   setIsDocumentationClass(false);
   if (isFilePathValid()) {
     QFileInfo fileInfo(getFileName());
-    // if item has file name as package.mo then its save folder structure
-    if (fileInfo.fileName().compare("package.mo") == 0) {
+    // if item has file name as package.mo and is top level then its save folder structure
+    if (isTopLevel() && (fileInfo.fileName().compare("package.mo") == 0)) {
       setSaveContentsType(LibraryTreeItem::SaveFolderStructure);
-    } else {
+    } else if (isTopLevel()) {
       setSaveContentsType(LibraryTreeItem::SaveInOneFile);
+    } else {
+      if (mpParentLibraryTreeItem->getFileName().compare(getFileName()) == 0) {
+        setSaveContentsType(LibraryTreeItem::SaveInOneFile);
+      } else if (fileInfo.fileName().compare("package.mo") == 0) {
+        setSaveContentsType(LibraryTreeItem::SaveFolderStructure);
+      } else {
+        setSaveContentsType(LibraryTreeItem::SaveInOneFile);
+      }
     }
   }
   setClassText("");