diff --git a/internal/configs/configschema/coerce_value.go b/internal/configs/configschema/coerce_value.go
index 41a533745c..66804c3752 100644
--- a/internal/configs/configschema/coerce_value.go
+++ b/internal/configs/configschema/coerce_value.go
@@ -27,16 +27,19 @@ func (b *Block) CoerceValue(in cty.Value) (cty.Value, error) {
 }
 
 func (b *Block) coerceValue(in cty.Value, path cty.Path) (cty.Value, error) {
+	convType := b.specType()
+	impliedType := convType.WithoutOptionalAttributesDeep()
+
 	switch {
 	case in.IsNull():
-		return cty.NullVal(b.ImpliedType()), nil
+		return cty.NullVal(impliedType), nil
 	case !in.IsKnown():
-		return cty.UnknownVal(b.ImpliedType()), nil
+		return cty.UnknownVal(impliedType), nil
 	}
 
 	ty := in.Type()
 	if !ty.IsObjectType() {
-		return cty.UnknownVal(b.ImpliedType()), path.NewErrorf("an object is required")
+		return cty.UnknownVal(impliedType), path.NewErrorf("an object is required")
 	}
 
 	for name := range ty.AttributeTypes() {
@@ -46,29 +49,32 @@ func (b *Block) coerceValue(in cty.Value, path cty.Path) (cty.Value, error) {
 		if _, defined := b.BlockTypes[name]; defined {
 			continue
 		}
-		return cty.UnknownVal(b.ImpliedType()), path.NewErrorf("unexpected attribute %q", name)
+		return cty.UnknownVal(impliedType), path.NewErrorf("unexpected attribute %q", name)
 	}
 
 	attrs := make(map[string]cty.Value)
 
 	for name, attrS := range b.Attributes {
+		attrType := impliedType.AttributeType(name)
+		attrConvType := convType.AttributeType(name)
+
 		var val cty.Value
 		switch {
 		case ty.HasAttribute(name):
 			val = in.GetAttr(name)
 		case attrS.Computed || attrS.Optional:
-			val = cty.NullVal(attrS.Type)
+			val = cty.NullVal(attrType)
 		default:
-			return cty.UnknownVal(b.ImpliedType()), path.NewErrorf("attribute %q is required", name)
+			return cty.UnknownVal(impliedType), path.NewErrorf("attribute %q is required", name)
 		}
 
-		val, err := attrS.coerceValue(val, append(path, cty.GetAttrStep{Name: name}))
+		val, err := convert.Convert(val, attrConvType)
 		if err != nil {
-			return cty.UnknownVal(b.ImpliedType()), err
+			return cty.UnknownVal(impliedType), append(path, cty.GetAttrStep{Name: name}).NewError(err)
 		}
-
 		attrs[name] = val
 	}
+
 	for typeName, blockS := range b.BlockTypes {
 		switch blockS.Nesting {
 
@@ -79,7 +85,7 @@ func (b *Block) coerceValue(in cty.Value, path cty.Path) (cty.Value, error) {
 				val := in.GetAttr(typeName)
 				attrs[typeName], err = blockS.coerceValue(val, append(path, cty.GetAttrStep{Name: typeName}))
 				if err != nil {
-					return cty.UnknownVal(b.ImpliedType()), err
+					return cty.UnknownVal(impliedType), err
 				}
 			default:
 				attrs[typeName] = blockS.EmptyValue()
@@ -100,7 +106,7 @@ func (b *Block) coerceValue(in cty.Value, path cty.Path) (cty.Value, error) {
 				}
 
 				if !coll.CanIterateElements() {
-					return cty.UnknownVal(b.ImpliedType()), path.NewErrorf("must be a list")
+					return cty.UnknownVal(impliedType), path.NewErrorf("must be a list")
 				}
 				l := coll.LengthInt()
 
@@ -116,7 +122,7 @@ func (b *Block) coerceValue(in cty.Value, path cty.Path) (cty.Value, error) {
 						idx, val := it.Element()
 						val, err = blockS.coerceValue(val, append(path, cty.IndexStep{Key: idx}))
 						if err != nil {
-							return cty.UnknownVal(b.ImpliedType()), err
+							return cty.UnknownVal(impliedType), err
 						}
 						elems = append(elems, val)
 					}
@@ -141,7 +147,7 @@ func (b *Block) coerceValue(in cty.Value, path cty.Path) (cty.Value, error) {
 				}
 
 				if !coll.CanIterateElements() {
-					return cty.UnknownVal(b.ImpliedType()), path.NewErrorf("must be a set")
+					return cty.UnknownVal(impliedType), path.NewErrorf("must be a set")
 				}
 				l := coll.LengthInt()
 
@@ -157,7 +163,7 @@ func (b *Block) coerceValue(in cty.Value, path cty.Path) (cty.Value, error) {
 						idx, val := it.Element()
 						val, err = blockS.coerceValue(val, append(path, cty.IndexStep{Key: idx}))
 						if err != nil {
-							return cty.UnknownVal(b.ImpliedType()), err
+							return cty.UnknownVal(impliedType), err
 						}
 						elems = append(elems, val)
 					}
@@ -182,7 +188,7 @@ func (b *Block) coerceValue(in cty.Value, path cty.Path) (cty.Value, error) {
 				}
 
 				if !coll.CanIterateElements() {
-					return cty.UnknownVal(b.ImpliedType()), path.NewErrorf("must be a map")
+					return cty.UnknownVal(impliedType), path.NewErrorf("must be a map")
 				}
 				l := coll.LengthInt()
 				if l == 0 {
@@ -196,11 +202,11 @@ func (b *Block) coerceValue(in cty.Value, path cty.Path) (cty.Value, error) {
 						var err error
 						key, val := it.Element()
 						if key.Type() != cty.String || key.IsNull() || !key.IsKnown() {
-							return cty.UnknownVal(b.ImpliedType()), path.NewErrorf("must be a map")
+							return cty.UnknownVal(impliedType), path.NewErrorf("must be a map")
 						}
 						val, err = blockS.coerceValue(val, append(path, cty.IndexStep{Key: key}))
 						if err != nil {
-							return cty.UnknownVal(b.ImpliedType()), err
+							return cty.UnknownVal(impliedType), err
 						}
 						elems[key.AsString()] = val
 					}
@@ -240,11 +246,3 @@ func (b *Block) coerceValue(in cty.Value, path cty.Path) (cty.Value, error) {
 
 	return cty.ObjectVal(attrs), nil
 }
-
-func (a *Attribute) coerceValue(in cty.Value, path cty.Path) (cty.Value, error) {
-	val, err := convert.Convert(in, a.Type)
-	if err != nil {
-		return cty.UnknownVal(a.Type), path.NewError(err)
-	}
-	return val, nil
-}
diff --git a/internal/configs/configschema/coerce_value_test.go b/internal/configs/configschema/coerce_value_test.go
index 3f57b174be..37f81b7698 100644
--- a/internal/configs/configschema/coerce_value_test.go
+++ b/internal/configs/configschema/coerce_value_test.go
@@ -538,6 +538,67 @@ func TestCoerceValue(t *testing.T) {
 			}),
 			``,
 		},
+		"nested types": {
+			// handle NestedTypes
+			&Block{
+				Attributes: map[string]*Attribute{
+					"foo": {
+						NestedType: &Object{
+							Nesting: NestingList,
+							Attributes: map[string]*Attribute{
+								"bar": {
+									Type:     cty.String,
+									Required: true,
+								},
+								"baz": {
+									Type:     cty.Map(cty.String),
+									Optional: true,
+								},
+							},
+						},
+						Optional: true,
+					},
+					"fob": {
+						NestedType: &Object{
+							Nesting: NestingSet,
+							Attributes: map[string]*Attribute{
+								"bar": {
+									Type:     cty.String,
+									Optional: true,
+								},
+							},
+						},
+						Optional: true,
+					},
+				},
+			},
+			cty.ObjectVal(map[string]cty.Value{
+				"foo": cty.ListVal([]cty.Value{
+					cty.ObjectVal(map[string]cty.Value{
+						"bar": cty.StringVal("beep"),
+					}),
+					cty.ObjectVal(map[string]cty.Value{
+						"bar": cty.StringVal("boop"),
+					}),
+				}),
+			}),
+			cty.ObjectVal(map[string]cty.Value{
+				"foo": cty.ListVal([]cty.Value{
+					cty.ObjectVal(map[string]cty.Value{
+						"bar": cty.StringVal("beep"),
+						"baz": cty.NullVal(cty.Map(cty.String)),
+					}),
+					cty.ObjectVal(map[string]cty.Value{
+						"bar": cty.StringVal("boop"),
+						"baz": cty.NullVal(cty.Map(cty.String)),
+					}),
+				}),
+				"fob": cty.NullVal(cty.Set(cty.Object(map[string]cty.Type{
+					"bar": cty.String,
+				}))),
+			}),
+			``,
+		},
 	}
 
 	for name, test := range tests {
diff --git a/internal/plans/objchange/objchange.go b/internal/plans/objchange/objchange.go
index 281b9dd13a..739d666480 100644
--- a/internal/plans/objchange/objchange.go
+++ b/internal/plans/objchange/objchange.go
@@ -308,7 +308,9 @@ func proposedNewAttributes(attrs map[string]*configschema.Attribute, prior, conf
 }
 
 func proposedNewNestedType(schema *configschema.Object, prior, config cty.Value) cty.Value {
-	var newV cty.Value
+	// If the config is null or empty, we will be using this default value.
+	newV := config
+
 	switch schema.Nesting {
 	case configschema.NestingSingle:
 		if !config.IsNull() {
@@ -323,6 +325,7 @@ func proposedNewNestedType(schema *configschema.Object, prior, config cty.Value)
 		if config.IsKnown() && !config.IsNull() {
 			configVLen = config.LengthInt()
 		}
+
 		if configVLen > 0 {
 			newVals := make([]cty.Value, 0, configVLen)
 			for it := config.ElementIterator(); it.Next(); {
@@ -345,8 +348,6 @@ func proposedNewNestedType(schema *configschema.Object, prior, config cty.Value)
 			} else {
 				newV = cty.ListVal(newVals)
 			}
-		} else {
-			newV = cty.NullVal(schema.ImpliedType())
 		}
 
 	case configschema.NestingMap:
@@ -378,8 +379,6 @@ func proposedNewNestedType(schema *configschema.Object, prior, config cty.Value)
 				// object values so that elements might have different types
 				// in case of dynamically-typed attributes.
 				newV = cty.ObjectVal(newVals)
-			} else {
-				newV = cty.NullVal(schema.ImpliedType())
 			}
 		} else {
 			configVLen := 0
@@ -403,8 +402,6 @@ func proposedNewNestedType(schema *configschema.Object, prior, config cty.Value)
 					newVals[k] = cty.ObjectVal(newEV)
 				}
 				newV = cty.MapVal(newVals)
-			} else {
-				newV = cty.NullVal(schema.ImpliedType())
 			}
 		}
 
@@ -446,8 +443,6 @@ func proposedNewNestedType(schema *configschema.Object, prior, config cty.Value)
 				}
 			}
 			newV = cty.SetVal(newVals)
-		} else {
-			newV = cty.NullVal(schema.ImpliedType())
 		}
 	}
 
diff --git a/internal/plans/objchange/objchange_test.go b/internal/plans/objchange/objchange_test.go
index 77147989b8..b0021fb14b 100644
--- a/internal/plans/objchange/objchange_test.go
+++ b/internal/plans/objchange/objchange_test.go
@@ -1461,6 +1461,81 @@ func TestProposedNew(t *testing.T) {
 				}))),
 			}),
 		},
+		"expected empty NestedTypes": {
+			&configschema.Block{
+				Attributes: map[string]*configschema.Attribute{
+					"set": {
+						NestedType: &configschema.Object{
+							Nesting: configschema.NestingSet,
+							Attributes: map[string]*configschema.Attribute{
+								"bar": {Type: cty.String},
+							},
+						},
+						Optional: true,
+					},
+					"map": {
+						NestedType: &configschema.Object{
+							Nesting: configschema.NestingMap,
+							Attributes: map[string]*configschema.Attribute{
+								"bar": {Type: cty.String},
+							},
+						},
+						Optional: true,
+					},
+				},
+			},
+			cty.ObjectVal(map[string]cty.Value{
+				"map": cty.MapValEmpty(cty.Object(map[string]cty.Type{"bar": cty.String})),
+				"set": cty.SetValEmpty(cty.Object(map[string]cty.Type{"bar": cty.String})),
+			}),
+			cty.ObjectVal(map[string]cty.Value{
+				"map": cty.MapValEmpty(cty.Object(map[string]cty.Type{"bar": cty.String})),
+				"set": cty.SetValEmpty(cty.Object(map[string]cty.Type{"bar": cty.String})),
+			}),
+			cty.ObjectVal(map[string]cty.Value{
+				"map": cty.MapValEmpty(cty.Object(map[string]cty.Type{"bar": cty.String})),
+				"set": cty.SetValEmpty(cty.Object(map[string]cty.Type{"bar": cty.String})),
+			}),
+		},
+		"optional types set replacement": {
+			&configschema.Block{
+				Attributes: map[string]*configschema.Attribute{
+					"set": {
+						NestedType: &configschema.Object{
+							Nesting: configschema.NestingSet,
+							Attributes: map[string]*configschema.Attribute{
+								"bar": {
+									Type:     cty.String,
+									Required: true,
+								},
+							},
+						},
+						Optional: true,
+					},
+				},
+			},
+			cty.ObjectVal(map[string]cty.Value{
+				"set": cty.SetVal([]cty.Value{
+					cty.ObjectVal(map[string]cty.Value{
+						"bar": cty.StringVal("old"),
+					}),
+				}),
+			}),
+			cty.ObjectVal(map[string]cty.Value{
+				"set": cty.SetVal([]cty.Value{
+					cty.ObjectVal(map[string]cty.Value{
+						"bar": cty.StringVal("new"),
+					}),
+				}),
+			}),
+			cty.ObjectVal(map[string]cty.Value{
+				"set": cty.SetVal([]cty.Value{
+					cty.ObjectVal(map[string]cty.Value{
+						"bar": cty.StringVal("new"),
+					}),
+				}),
+			}),
+		},
 	}
 
 	for name, test := range tests {