rollover of deceased owner's account to spouse

We administer a 401K Plan that has owner and spouse as participants as well as rank-and-file. Husband died 5 years ago, and his account is still open.

Fund-holder will not permit rollover of deceased participant's account into spouse's.

I do not see why not; when I asked the fund-holder (in this case Voya), all they could tell me is "no..we can't do that."

I see no reason why not.

Am I missing something or is just that Voya will be losing out on a fee?

Not sure of VOYA's reasoning on that...

For a work around what if the spouse requested rollover of the death benefit, payable to VOYA and then rolled it back into the plan into her account as a rollover using the VOYA rollover form?   

If Voya is not a fiduciary, then Voya must follow the instructions of the appropriate fiduciary or convince the fiduciary that the ordered action is not proper (e.g. not permitted by contract or plan terms). If not, Voya should be fired and threatened with breach of duty. Taking on fiduciary functions by meddling (not executing administrative directions) makes one a fiduciary, whether or not named.

If Voya is a fiduciary, then Voya must act in accordance with a plan terms or the instructions of a superior fiduciary and should be able to explain its actions coherently.

Start by asking yourself, then Voya, if Voya is acting as a fiduciary.

Without defending the weak conduct of any recordkeeper:

And without knowing what the retirement plan allows or precludes:

The surviving spouse might consider that asking a recordkeeper to do something it seems not tooled-up to do could lead to poor service.

The surviving spouse might prefer to direct a rollover to an eligible retirement plan that’s ready to receive the rollover contribution.

Does the attached help?

IRS Rollover Chart.pdf