Question: Kelly ( 6 5 ) contributed to an HSA before she retired and still has funds available. If she uses $ 1 , 5 0

Kelly (65) contributed to an HSA before she retired and still has funds available. If she uses $1,500 of her HSA funds to pay for a shopping spree, what is the federal tax consequence?
No tax and no penalty.
Ordinary income tax, but no penalty.
Ordinary income tax and a 20% penalty.
No tax, but a 20% penalty.

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