I am currently on h1b visa, but will be moving out of the US at the end of the year. I have a fully vested 401k (around $30k) and I'm considering to withdraw the money, rather than keep it for retirement. What would be best withdrawal plan in terms of minimizing taxes?
Can I gradually withdraw from the 401k, so that I will only pay minimal fed/state taxes as I won't have US income after this year. (Of course I will need to pay the 10% penalty). So for 2009, around how much can I withdraw without paying taxes (except for the 10% penalty)?
What are my other withdrawal options? Thanks!

For 2009 you will file non-resident tax return. You will only get exemption deduction (which is $3500) for 2008.
After that first $8000 (around figure) is taxed at 10%. Then starts 15% slab for next $24,000 (around figure).

Is there an over-riding reason why you cannot roll the money into a rollover IRA and keep it there for your retirement?

Charles Schwab will definitely allow you to set up a rollover IRA and then manage it from your home country. That way, it will be available to you when you retire, which was the reason you set up the 401K to begin with.