I'm crossing over from IBM Domino to Exchange 2013.

One of the processes in Domino is that I can create a "Inactive" security group, of which contains terminated employees.
The group will deny that account to Mail Server, but still allow that account to receive emails until such time as it's decided to archive then remove the account.

Can this setup be done with Exchange 2013? If say any guidance how?

What do you mean by deny to mail server but still allow retireve email?

If concern is just to prevent user from logging in , you can simply change user's AD account password and set a automated reply on mailbox communicating Mr.A has left the organization and any concerns may be handled by Mr.B or vice versa  & later disable / remove mailbox per business blueprint.

Other way to preserve emails for long time is to use Litigation Hold.

In Exchange 2010 and Exchange Online, introduced Litigation Hold to allow you to immutably preserve mailbox content to meet long term preservation and eDiscovery requirements. When a mailbox is placed on Litigation Hold, mailbox content is preserved indefinitely.

For more details refer link :

http://blogs.technet.com/b/exchange/archive/2013/12/11/litigation-hold-and-in-place-hold-in-exchange-2013-and-exchange-online.aspx