participant died over a year ago. amount in excess of $5,000.
spouse makes no response as to receiving distribution.
what happens after 5 years?

That's a little hard to say without seeing the specific plan language. In general, if the spouse is the sole designated beneficiary and RMD's have not yet commenced, then I think RMD's would need to begin by 12/31 of the calendar year following death. See 1.401(a)(9)-5, Q&A-5. However, the plan may have the optional "5 year" provision under 1.401(a)(9)-3, so it depends upon plan language.

And I now realize you were asking what happens AFTER 5 years. Sorry. I assume the plan will have an operational violation. They would just need to cut a check for the entire amount, I'm guessing, and hopefully they won't (or didn't) already miss making RMD's.

Yuck.

Is it possible that the spouse did not respond due to non-receipt of info? or death?
(Plan sponsor may be able to resolve that ambiguity in about 3 minutes.)

Q 1- why does it matter if the account balance is over 5K? - Spousal consent is not required to pay a death distribution.

Q 2 what does plan provide for distributions after the death of the employee?

Q3 why is do the RMD rules require paying spouse after 5 yrs?

participant died ay age 65, it is now 2 years after the fact - so RMD is not an issue - yet.
document clearly states that payments are made as elected by the 'beneficiary (since the participant made no election)
either lump sum or installments.
so if the spouse (beneficary) has not made an election then what? how can you simply cut a check since the amount is above the threshhold of 5000) [who knows why spouse doesn't respond. I am 'indirectly involved' this is a question i got asked for someone I do some work for.
do you 'have to wait' until 12/31 of calendar year participant would have turned age 70 1/2 when distributions must be begin?

Spousal consent is not required before a death benefit can be paid. Only the employee's consent is required to pay a benefit over 5,000.

Given that the "document clearly states that payments are made as elected by the beneficiary", then lacking provisions elsewhere in the document, the money sits in the plan until MRD's commence in the year the part would have been 70.5 and the money is slowly paid out that way.

While mjb is correct that you don't need spousal consent on a death benefit, you do need a plan provision that allows you to force it out w//out an election. Your plan "clearly states" an election is required.

Edit: This is a big annual task in large plans. At my last job, I'd send 200+ MRD letters per year and 10-20% were beneficiaries. And I was always surprised how many people only want the minimum and want it on the last possible day of the year.

P.S. The lack of a response, unless you explicity tell them to contact you, means they're happy to leave the money where it is (or at least it's less confusing than trying to move it). Typically a lack of response is interpretted as an election to defer payment.