I am a non-resident alien aged 62, living in Europe and working for a US company. I have never lived in the US or paid tax there. Up until 2002 I was on the company's US payroll, and I have a 401k. Since then, I have been "localized" in France on a local payroll. I plan to retire in 2003. Will I have to pay 20% withholding tax if I withdraw the 401k amount in a lump sum? What are my options to reduce the tax bite?

You have no options, the withdrawal will be added to your french income and you pay french taxes for your total income.