diff --git a/awx/api/serializers.py b/awx/api/serializers.py
index 4588a5ae80..ad05837d08 100644
--- a/awx/api/serializers.py
+++ b/awx/api/serializers.py
@@ -44,7 +44,7 @@ from awx.main.fields import ImplicitRoleField
 from awx.main.utils import (
     get_type_for_model, get_model_for_type, timestamp_apiformat,
     camelcase_to_underscore, getattrd, parse_yaml_or_json,
-    has_model_field_prefetched, extract_ansible_vars)
+    has_model_field_prefetched, extract_ansible_vars, encrypt_dict)
 from awx.main.utils.filters import SmartFilter
 from awx.main.redact import REPLACE_STR
 
@@ -3140,7 +3140,6 @@ class LaunchConfigurationBaseSerializer(BaseSerializer):
         attrs['char_prompts'] = mock_obj.char_prompts
 
         # Insert survey_passwords to track redacted variables
-        # TODO: perform encryption on save
         if 'extra_data' in attrs:
             extra_data = parse_yaml_or_json(attrs.get('extra_data', {}))
             if hasattr(ujt, 'survey_password_variables'):
@@ -3150,6 +3149,20 @@ class LaunchConfigurationBaseSerializer(BaseSerializer):
                         password_dict[key] = REPLACE_STR
                 if not self.instance or password_dict != self.instance.survey_passwords:
                     attrs['survey_passwords'] = password_dict
+                if not isinstance(attrs['extra_data'], dict):
+                    attrs['extra_data'] = parse_yaml_or_json(attrs['extra_data'])
+                encrypt_dict(attrs['extra_data'], password_dict.keys())
+                if self.instance:
+                    db_extra_data = parse_yaml_or_json(self.instance.extra_data)
+                else:
+                    db_extra_data = {}
+                for key in password_dict.keys():
+                    if attrs['extra_data'].get(key, None) == REPLACE_STR:
+                        if key not in db_extra_data:
+                            raise serializers.ValidationError(
+                                _('Provided variable {} has no database value to replace with.').format(key))
+                        else:
+                            attrs['extra_data'][key] = db_extra_data[key]
         return attrs
 
 
diff --git a/awx/main/models/unified_jobs.py b/awx/main/models/unified_jobs.py
index 1d2a4eb221..f1c934b9a3 100644
--- a/awx/main/models/unified_jobs.py
+++ b/awx/main/models/unified_jobs.py
@@ -34,7 +34,7 @@ from django_celery_results.models import TaskResult
 from awx.main.models.base import * # noqa
 from awx.main.models.mixins import ResourceMixin, TaskManagerUnifiedJobMixin
 from awx.main.utils import (
-    encrypt_value, decrypt_field, _inventory_updates,
+    encrypt_dict, decrypt_field, _inventory_updates,
     copy_model_by_class, copy_m2m_relationships,
     get_type_for_model, parse_yaml_or_json
 )
@@ -349,11 +349,7 @@ class UnifiedJobTemplate(PolymorphicModel, CommonModelNameNotUnique, Notificatio
         # automatically encrypt survey fields
         if hasattr(self, 'survey_spec') and getattr(self, 'survey_enabled', False):
             password_list = self.survey_password_variables()
-            for key in kwargs.get('extra_vars', {}):
-                if key in password_list:
-                    kwargs['extra_vars'][key] = encrypt_value(
-                        kwargs['extra_vars'][key]
-                    )
+            encrypt_dict(kwargs.get('extra_vars', {}), password_list)
 
         unified_job_class = self._get_unified_job_class()
         fields = self._get_unified_job_field_names()
diff --git a/awx/main/tests/unit/api/serializers/test_workflow_serializers.py b/awx/main/tests/unit/api/serializers/test_workflow_serializers.py
index 7e19f66420..712345a1b6 100644
--- a/awx/main/tests/unit/api/serializers/test_workflow_serializers.py
+++ b/awx/main/tests/unit/api/serializers/test_workflow_serializers.py
@@ -177,6 +177,8 @@ class TestWorkflowJobTemplateNodeSerializerSurveyPasswords():
         })
         assert 'survey_passwords' in attrs
         assert 'var1' in attrs['survey_passwords']
+        assert attrs['extra_data']['var1'].startswith('$encrypted$')
+        assert len(attrs['extra_data']['var1']) > len('$encrypted$')
 
     def test_set_survey_passwords_modify(self, jt):
         serializer = WorkflowJobTemplateNodeSerializer()
@@ -192,6 +194,25 @@ class TestWorkflowJobTemplateNodeSerializerSurveyPasswords():
         })
         assert 'survey_passwords' in attrs
         assert 'var1' in attrs['survey_passwords']
+        assert attrs['extra_data']['var1'].startswith('$encrypted$')
+        assert len(attrs['extra_data']['var1']) > len('$encrypted$')
+
+    def test_use_db_answer(self, jt):
+        serializer = WorkflowJobTemplateNodeSerializer()
+        wfjt = WorkflowJobTemplate(name='fake-wfjt')
+        serializer.instance = WorkflowJobTemplateNode(
+            workflow_job_template=wfjt,
+            unified_job_template=jt,
+            extra_data={'var1': '$encrypted$foooooo'}
+        )
+        attrs = serializer.validate({
+            'unified_job_template': jt,
+            'workflow_job_template': wfjt,
+            'extra_data': {'var1': '$encrypted$'}
+        })
+        assert 'survey_passwords' in attrs
+        assert 'var1' in attrs['survey_passwords']
+        assert attrs['extra_data']['var1'] == '$encrypted$foooooo'
 
 
 @mock.patch('awx.api.serializers.WorkflowJobTemplateNodeSerializer.get_related', lambda x,y: {})
diff --git a/awx/main/utils/encryption.py b/awx/main/utils/encryption.py
index c8c5b72afd..29aed4721e 100644
--- a/awx/main/utils/encryption.py
+++ b/awx/main/utils/encryption.py
@@ -9,8 +9,10 @@ from cryptography.hazmat.backends import default_backend
 from django.utils.encoding import smart_str
 
 
-__all__ = ['get_encryption_key', 'encrypt_value', 'encrypt_field',
-           'decrypt_field', 'decrypt_value']
+__all__ = ['get_encryption_key',
+           'encrypt_field', 'decrypt_field',
+           'encrypt_value', 'decrypt_value',
+           'encrypt_dict']
 
 logger = logging.getLogger('awx.main.utils.encryption')
 
@@ -125,3 +127,13 @@ def decrypt_field(instance, field_name, subfield=None):
             exc_info=True
         )
         raise
+
+
+def encrypt_dict(data, fields):
+    '''
+    Encrypts all of the dictionary values in `data` under the keys in `fields`
+    in-place operation on `data`
+    '''
+    encrypt_fields = set(data.keys()).intersection(fields)
+    for key in encrypt_fields:
+        data[key] = encrypt_value(data[key])