Say we have a 5% owner receiving a RMD after age 70 1/2 as an annuity.

If he actually retires at age 80 would he then be legally allowed to take a lump sum of his accrued benefit?

401(a)(9) gives me the impression that the RMD annuity cannot be increased for such a reason.

Any thoughts?

RMD is the Required "Minimum". This does not stop a participant taking more than the RMD, if the plan allows in-service distribution.

Since the whole idea of the RMD is to make sure taxes are not deferred forever, why would the IRS object to someone taking more than the RMD - more the better so they can collect higher taxes now than later?

Which specific part of 401(a)(9) gives you the impression otherwise?

I think it depends on what the document says. What was the basis for the DB annuity? How was it calculated? Was it a regular distribution election, i.e. was a life annuity elected? If so, and a lump sum was also available, then I don't think that a lump sum later is an option because an election has already been made at the annuity starting date and the QJSA waiver period has expired.

But again I think the answer depends on the specifics of the document, and what election was or was not made at the start date.