diff --git a/lib/vagrant/bundler.rb b/lib/vagrant/bundler.rb
index 275e970d2..4df5101f3 100644
--- a/lib/vagrant/bundler.rb
+++ b/lib/vagrant/bundler.rb
@@ -220,7 +220,7 @@ module Vagrant
       # Generate all required plugin deps
       plugin_deps = plugins.map do |name, info|
         if update[:gems] == true || (update[:gems].respond_to?(:include?) && update[:gems].include?(name))
-          gem_version = '> 0'
+          gem_version = plugins[name]["gem_version"].to_s.empty? ? "> 0" : plugins[name]["gem_version"]
           skips << name
         else
           gem_version = info['gem_version'].to_s.empty? ? '> 0' : info['gem_version']
@@ -275,12 +275,16 @@ module Vagrant
       # Create the request set for the new plugins
       request_set = Gem::RequestSet.new(*plugin_deps)
 
+      system_plugins = plugins.map do |plugin_name, plugin_info|
+        plugin_name if plugin_info["system"]
+      end.compact
+      installer_set.system_plugins = system_plugins
+
       installer_set = Gem::Resolver.compose_sets(
         installer_set,
-        generate_builtin_set,
+        generate_builtin_set(system_plugins),
         generate_plugin_set(skips)
       )
-
       @logger.debug("Generating solution set for installation.")
 
       # Generate the required solution set for new plugins
@@ -349,11 +353,13 @@ module Vagrant
     end
 
     # Generate the builtin resolver set
-    def generate_builtin_set
+    def generate_builtin_set(system_plugins=[])
       builtin_set = BuiltinSet.new
       @logger.debug("Generating new builtin set instance.")
       vagrant_internal_specs.each do |spec|
-        builtin_set.add_builtin_spec(spec)
+        if !system_plugins.include?(spec.name)
+          builtin_set.add_builtin_spec(spec)
+        end
       end
       builtin_set
     end
@@ -428,9 +434,11 @@ module Vagrant
     # the entire set used for performing full resolutions on install.
     class VagrantSet < Gem::Resolver::InstallerSet
       attr_accessor :prefer_sources
+      attr_accessor :system_plugins
 
       def initialize(domain, defined_sources={})
         @prefer_sources = defined_sources
+        @system_plugins = []
         super(domain)
       end
 
@@ -438,6 +446,11 @@ module Vagrant
       # for preferred sources
       def find_all(req)
         result = super
+        if system_plugins.include?(req.name)
+          result.delete_if do |spec|
+            spec.is_a?(Gem::Resolver::InstalledSpecification)
+          end
+        end
         subset = result.find_all do |idx_spec|
           preferred = false
           if prefer_sources[req.name]
diff --git a/lib/vagrant/plugin/manager.rb b/lib/vagrant/plugin/manager.rb
index 4f875fd6f..64891bd37 100644
--- a/lib/vagrant/plugin/manager.rb
+++ b/lib/vagrant/plugin/manager.rb
@@ -146,7 +146,7 @@ module Vagrant
             system[k] = v.merge("system" => true)
           end
         end
-        plugin_list = system.merge(@user_file.installed_plugins)
+        plugin_list = Util::DeepMerge.deep_merge(system, @user_file.installed_plugins)
 
         # Sort plugins by name
         Hash[
@@ -161,7 +161,15 @@ module Vagrant
       #
       # @return [Array<Gem::Specification>]
       def installed_specs
-        installed = Set.new(installed_plugins.keys)
+        installed_plugin_info = installed_plugins
+        installed = Set.new(installed_plugin_info.keys)
+        installed_versions = Hash[
+          installed_plugin_info.map{|plugin_name, plugin_info|
+            gem_version = plugin_info["gem_version"].to_s
+            gem_version = "> 0" if gem_version.empty?
+            [plugin_name, Gem::Requirement.new(gem_version)]
+          }
+        ]
 
         # Go through the plugins installed in this environment and
         # get the latest version of each.
@@ -170,6 +178,9 @@ module Vagrant
           # Ignore specs that aren't in our installed list
           next if !installed.include?(spec.name)
 
+          next if installed_versions[spec.name] &&
+            !installed_versions[spec.name].satisfied_by?(spec.version)
+
           # If we already have a newer version in our list of installed,
           # then ignore it
           next if installed_map.key?(spec.name) &&
diff --git a/test/unit/vagrant/plugin/manager_test.rb b/test/unit/vagrant/plugin/manager_test.rb
index da94c6ea6..8889c5ebd 100644
--- a/test/unit/vagrant/plugin/manager_test.rb
+++ b/test/unit/vagrant/plugin/manager_test.rb
@@ -4,7 +4,7 @@ require "pathname"
 require "vagrant/plugin"
 require "vagrant/plugin/manager"
 require "vagrant/plugin/state_file"
-
+require "vagrant/util/deep_merge"
 require File.expand_path("../../../base", __FILE__)
 
 describe Vagrant::Plugin::Manager do
@@ -243,7 +243,7 @@ describe Vagrant::Plugin::Manager do
           expect(plugins.length).to eql(2)
           expect(plugins).to have_key("foo")
           expect(plugins["foo"]["gem_version"]).to eq("0.1.0")
-          expect(plugins["foo"]["system"]).to be_false
+          expect(plugins["foo"]["system"]).to be_true
           expect(plugins).to have_key("bar")
           expect(plugins["bar"]["system"]).to be_true
         end