A seat assembly includes a seatback with a frame assembly. A track member is operably coupled to the frame assembly. A carriage member is pivotally and slideably coupled to the track member between raised and lowered positions. At least one support rod having upper and lower portions is operably coupled to the carriage member for movement therewith. A headrest assembly is supported on the upper portion of the at least one support rod and is operable between extended and retracted positions. The headrest assembly includes a headrest bun with a downwardly extending lower portion. The seatback includes a receiving area extending inwardly from a front side of the seatback and extending downwardly from an upper side of the seatback. A portion of the downwardly extending lower portion of the headrest assembly is received in the receiving area of the seatback when the headrest assembly is in the retracted position.