diff --git a/cmd/object-handlers.go b/cmd/object-handlers.go
index 87c63f9b6..b3c706be1 100644
--- a/cmd/object-handlers.go
+++ b/cmd/object-handlers.go
@@ -2491,12 +2491,6 @@ func (api objectAPIHandlers) PutObjectExtractHandler(w http.ResponseWriter, r *h
 			sha256hex = getContentSha256Cksum(r, serviceS3)
 		}
 	}
-	entryRequestBase := r.Clone(ctx)
-	// The streaming reader fills r.Trailer while untar writes small entries in
-	// parallel. Entry authorization never consumes trailers, so keep them out
-	// of the immutable request template cloned by those goroutines.
-	entryRequestBase.Trailer = nil
-
 	hreader, err := hash.NewReader(ctx, reader, size, md5hex, sha256hex, size)
 	if err != nil {
 		writeErrorResponse(ctx, w, toAPIError(ctx, err), r.URL)
@@ -2517,6 +2511,12 @@ func (api objectAPIHandlers) PutObjectExtractHandler(w http.ResponseWriter, r *h
 	sseConfig.Apply(r.Header, sse.ApplyOptions{
 		AutoEncrypt: globalAutoEncryption,
 	})
+	entryRequestBase := r.Clone(ctx)
+	// The streaming reader fills r.Trailer while untar writes small entries in
+	// parallel. Entry authorization never consumes trailers, so keep them out
+	// of the immutable request template cloned by those goroutines. Snapshot
+	// after applying bucket defaults so extracted objects retain encryption.
+	entryRequestBase.Trailer = nil
 	rawReplica := hasReplicaStatus(r.Header)
 	markerExact := hasReplicationMarker(r.Header)
 	trustedRequestCtx := withReplicationTrust(ctx, true, rawReplica)
@@ -2551,6 +2551,7 @@ func (api objectAPIHandlers) PutObjectExtractHandler(w http.ResponseWriter, r *h
 	setTarS3Err := func(code APIErrorCode) {
 		tarS3Err.CompareAndSwap(int32(ErrNone), int32(code))
 	}
+	ignoreEntryErrors := opts.ignoreErrs
 
 	putObjectTar := func(reader io.Reader, info os.FileInfo, object string) error {
 		size := info.Size()
@@ -2677,7 +2678,9 @@ func (api objectAPIHandlers) PutObjectExtractHandler(w http.ResponseWriter, r *h
 		}
 
 		if s3err != ErrNone {
-			setTarS3Err(s3err)
+			if !ignoreEntryErrors {
+				setTarS3Err(s3err)
+			}
 			return ObjectLocked{}
 		}
 
diff --git a/cmd/replication-trust_test.go b/cmd/replication-trust_test.go
index b01489d50..8b74443ac 100644
--- a/cmd/replication-trust_test.go
+++ b/cmd/replication-trust_test.go
@@ -28,7 +28,9 @@ import (
 
 	"github.com/minio/madmin-go/v3"
 	"github.com/minio/minio/internal/auth"
+	"github.com/minio/minio/internal/crypto"
 	xhttp "github.com/minio/minio/internal/http"
+	"github.com/minio/minio/internal/kms"
 	"github.com/minio/pkg/v3/policy"
 )
 
@@ -379,6 +381,63 @@ func testAPISnowballReplicationTrustIsPerEntry(obj ObjectLayer, instanceType, bu
 	}
 }
 
+func TestAPISnowballInheritsBucketEncryption(t *testing.T) {
+	defer DetectTestLeak(t)()
+	ExecObjectLayerAPITest(ExecObjectLayerAPITestArgs{
+		t:          t,
+		objAPITest: testAPISnowballInheritsBucketEncryption,
+	})
+}
+
+func testAPISnowballInheritsBucketEncryption(obj ObjectLayer, instanceType, bucketName string,
+	apiRouter http.Handler, credentials auth.Credentials, t *testing.T,
+) {
+	previousKMS := GlobalKMS
+	GlobalKMS = kms.NewStub("snowball-default-encryption")
+	defer func() { GlobalKMS = previousKMS }()
+	sseXML := []byte(`<ServerSideEncryptionConfiguration xmlns="http://s3.amazonaws.com/doc/2006-03-01/"><Rule><ApplyServerSideEncryptionByDefault><SSEAlgorithm>AES256</SSEAlgorithm></ApplyServerSideEncryptionByDefault></Rule></ServerSideEncryptionConfiguration>`)
+	if _, err := globalBucketMetadataSys.Update(t.Context(), bucketName, bucketSSEConfig, sseXML); err != nil {
+		t.Fatalf("%s: configure bucket encryption: %v", instanceType, err)
+	}
+
+	var body bytes.Buffer
+	tw := tar.NewWriter(&body)
+	objects := []string{"encrypted/one", "encrypted/two"}
+	for _, object := range objects {
+		data := []byte("snowball bucket encryption " + object)
+		if err := tw.WriteHeader(&tar.Header{Name: object, Mode: 0o600, Size: int64(len(data))}); err != nil {
+			t.Fatal(err)
+		}
+		if _, err := tw.Write(data); err != nil {
+			t.Fatal(err)
+		}
+	}
+	if err := tw.Close(); err != nil {
+		t.Fatal(err)
+	}
+
+	req, err := newTestSignedRequestV4(http.MethodPut, getPutObjectURL("", bucketName, "encrypted-snowball.tar"),
+		int64(body.Len()), bytes.NewReader(body.Bytes()), credentials.AccessKey, credentials.SecretKey,
+		map[string]string{xhttp.AmzSnowballExtract: "true"})
+	if err != nil {
+		t.Fatal(err)
+	}
+	rec := httptest.NewRecorder()
+	apiRouter.ServeHTTP(rec, req)
+	if rec.Code != http.StatusOK {
+		t.Fatalf("%s: Snowball PUT status %d: %s", instanceType, rec.Code, rec.Body.String())
+	}
+	for _, object := range objects {
+		info, err := obj.GetObjectInfo(t.Context(), bucketName, object, ObjectOptions{})
+		if err != nil {
+			t.Fatalf("%s: get %s: %v", instanceType, object, err)
+		}
+		if _, encrypted := crypto.IsEncrypted(info.UserDefined); !encrypted {
+			t.Errorf("%s: extracted entry %s did not inherit bucket encryption", instanceType, object)
+		}
+	}
+}
+
 func newSnowballReplicationTrustUser(t *testing.T, instanceType, bucketName, allowedPrefix string) auth.Credentials {
 	t.Helper()
 	ctx := t.Context()