diff --git a/lib/scope.js b/lib/scope.js
index ad31f306..90301d9a 100644
--- a/lib/scope.js
+++ b/lib/scope.js
@@ -469,6 +469,7 @@ AST_Lambda.DEFMETHOD("init_vars", function(parent_scope) {
     this.uses_arguments = false;
     this.def_variable(new AST_SymbolFunarg({
         name: "arguments",
+        scope: this,
         start: this.start,
         end: this.end,
     }));
diff --git a/test/compress/arrows.js b/test/compress/arrows.js
index 389b877a..9691648e 100644
--- a/test/compress/arrows.js
+++ b/test/compress/arrows.js
@@ -1072,3 +1072,37 @@ issue_5414_2: {
     expect_stdout: true
     node_version: ">=4"
 }
+
+issue_5416: {
+    options = {
+        dead_code: true,
+        evaluate: true,
+        inline: true,
+        loops: true,
+        unused: true,
+    }
+    input: {
+        var f = () => {
+            while ((() => {
+                console;
+                var a = function g(arguments) {
+                    console.log(arguments);
+                }();
+            })());
+        };
+        f();
+    }
+    expect: {
+        var f = () => {
+            {
+                arguments = void 0;
+                console;
+                console.log(arguments);
+                var arguments;
+            }
+        };
+        f();
+    }
+    expect_stdout: "undefined"
+    node_version: ">=4"
+}