@Peter, I'm a aware of multiple providers who will take cashout IRAs under the dollar limit or will take cashout rollover IRAs of any dollar amount if the Plan is terminated, but I don't know of any who take cashout rollover IRAs over the cashout limit because the participant is at the later of age 62 or Plan's Normal Retirement Age and the Plan calls for them to be cashed out. These providers may exist and if they do, I'd be interested in them.
As to the OP question whether it is correct or not, our Plans will pay the RMD, if the participant is terminated and if they want more then the IRA we tell them the plan requires they take a full distribution either taxable, rollover or split between the two but the Plan does not make ad hoc payments.