The most correct statement about the energies in the system when the magnets move to attach to each other is:
The energy stored in the system is converted to kinetic, thermal, and sound energy.
When the magnets come together, the potential energy due to their magnetic fields is converted mainly into kinetic energy as they move toward each other. Additionally, some energy may be dissipated as thermal energy (due to friction or air resistance) and possibly as sound energy (the sound of the magnets snapping together).