"I think that the 20% withholding would only apply if he were under age 59 1/2."
That is not correct. However, because they directly rolled the otherwise taxable earnings over to a traditional IRA, no withholding was required because direct rollovers are exempt from the general withholding requirement. That means that all of the remainder was paid directly to your husband and the remainder, less the RMD, can be rolled over to a Roth IRA. Once in the Roth IRA that amount can be distributed at any time without tax, but any earnings within the Roth IRA will be taxable until it has been 5 years since the beginning of the first year for which your husband made his first Roth IRA contribution (which would be January 1, 2023 if he has never had another Roth IRA).
Because the otherwise taxable portion has been rolled over to a traditional IRA, nothing you could do with the rest of the distribution would make any part the distribution taxable.
Your husband will be receiving two Forms 1099-R reporting the distributions from the plan, one with the earnings amount in box 1, zero in box 2a and code G in box 7. The other one should have in box 1 the amount paid directly to him, zero in box 2a, the same amount in box 5 as is in box 1, and code 7 in box 7.
