What advantage is offered by HSAs for withdrawals made after retirement age?

The correct choice highlights that Health Savings Accounts (HSAs) provide a unique advantage similar to that of Individual Retirement Accounts (IRAs) when withdrawals are made after retirement age. This similarity comes from the fact that, once you reach age 65, funds in an HSA can be withdrawn for any purpose without facing the typical penalties that apply to many retirement accounts. However, if the funds are used for qualified medical expenses, they remain tax-free, providing tax advantages akin to an IRA withdrawal.

This feature enables retirees to access their accumulated savings with flexibility, whether for healthcare expenses or other retirement needs. The treatment of HSA withdrawals as similar to IRA withdrawals means that individuals can use these funds more freely once they retire, adding to the appeal of HSAs as a financial planning tool.

The comparison to options like incurring state taxes or being limited to non-medical expenses does not align with HSAs' broader benefits during retirement, which further supports the correctness of the selected answer.