Best way to have mutual overlapping in Illustrator

I'm using Illustrator CS5, and I'm trying to have two groups (with multiple paths in each) overlap properly.

On the top side, group A should overlap group B, but on the bottom side, group B should overlap group A.

The only solution I can come up with is to Knife-cut it in two, but then I get ugly cutting lines I can see in the result, even if I don't move the parts away from each other.

Any ideas?!

This will hopefully make it clear. I want the arm to be over the t-shirt at the bottom, but under the shirt at the top.