Some projection systems use a polarization beamsplitter (PBS) for coupling light to and from an image-forming device. The PBS is typically formed with a reflective polarizing layer disposed between glass covers. Stress birefringence in the glass cover lying between the reflective polarizing layer and the image-forming device can reduce the image contrast of the projection system. A quarter-wave retarding element positioned between the glass cover and the image-forming device is used to compensate for the birefringence, at least in part. This permits the PBS to use glass covers formed of a glass material having a higher stress optic coefficient than before, while still maintaining high image contrast.