Penn determines how much they feel that your family can afford to pay. If you already know that Penn is not affordable, why apply ED? it is not going to make money suddenly appear.
Yes, the fafsa looks at money intended for retirement, especially if that money is not in a retirement account 401k/403b, etc.
Your parents are first in line when it comes to paying for college. You need to sit down with them, run your numbers through the net price calculator and then discuss if Penn is a financially feasible option for your family