RMD for in service dist?

Participant (non owner) over RMD Age, on workers comp so not formally terminated, and requests eligible in service distribution. With no distributable event, would part of this distribution be treated as an RMD at time of distribution? If not, say participant formally terminates later in the year but there is no more account balance - in that case send a letter and issue 1099-R for RMD amount?

Are they requesting a cash distribution or a rollover? If they are requesting cash, then it's fine.

If they are requesting a rollover, then there is the possibility that they could fail to take their RMD if they terminate before 12/31/2021. In order to avoid that possibility, they should take at least the amount that their 2021 RMD would be, if 2021 were a distribution calendar year, based on their account balance at 12/31/2020 and their current age, as a cash distribution and roll the rest over. It might help to remind the participant that if they fail to take their RMD there is a substantial excise tax that they would be responsible for.

If they ultimately refuse to take enough of their distribution in cash, and it later turns out that a 2021 RMD is required, then a corrected 1099-R should be issued showing the RMD amount as a taxable distribution and only the remainder as eligible for rollover. The participant would have to be notified that $X amount of their distribution was not eligible for rollover and should be removed from their IRA.