I made a mistake. While i am using KMS, I guess somehow in my config.txt file, the changes I made to force 1080P got commented. Maybe the raspiconfig did it when I selected to have my monitor set resolution. Anyway, I uncommented the forced resolution and now the pi is working in in 1080P. Not sure if that's how its supposed to work?
Please do not post a support request without first reading and following the advice in https://retropie.org.uk/forum/topic/3/read-this-first