One of our most commonly asked questions is "how do I forward email outside of Office 365?" This article will attempt to describe all the different options available to you, as well as guide you through the steps required to set this up.
First and foremost, it there are two main categories of forwarding you'll need to pick from:
Option 1: Forwarding an Office 365 mailbox - this scenario is typical when you want an Office 365 login, whether it is because you need one for another Office 365 service (like Lync or SharePoint), or because you eventually will move all your email to Office 365.
Option 2: Forwarding for a simple email address (without a mailbox) - this is beneficial when there is no need to store any email on Office 365 for the address, and there is no reason to create an Office 365 account.
You can change between options at any time, but it requires deleting the object created and creating a new object, so it may be a good idea to not choose lightly.
In addition, there are a few alternative options presented at the end for advanced scenarios.
Scenarios Background
In both options, we will use the same paradigm. TailspinToys.com is our Office 365 domain. We want all email sent to Support@TailspinToys.com to be forwarded to TailspinCRM@Contoso.com, which is our external CRM provider.
Option 1: Forwarding email sent to an Office 365 mailbox
If you are a user of Office 365 and want to simply set up forwarding for your own mailbox, you can do that by doing the following:
1. Log into Outlook Web App
2. In the top right corner of the OWA window, press the “Cogwheel” 
button that will take you to Settings, and then choose Options:
3. From the Options page, where Account is selected in the left frame and My Account is selected in the middle. Click on the “Forward your email” link on the right:
4. Under the Forwarding section, type in the external email address that you want to forward your mail to and press the “Start Forwarding” button:
That is all!
Administrator tips
If you have multiple accounts you wish to configure forwarding for, you may find that using Exchange PowerShell is faster. You can do this by making use of the ForwardingSmtpAddress & DeliverToMailboxAndForward properties on mailbox objects, for example:
Set-Mailbox Support –ForwardingSmtpAddress TailspinCRM@contoso.com –DeliverToMailboxAndForward $false
In this case, Support is the mailbox you wish to forward mail for, and TailspinCRM@contoso.com is the address that you would like to forward the email to. Because we set DeliverToMailboxAndForward to false, a copy of the email will NOT be kept in the Office 365 mailbox.
Turning off forwarding is as simple as:
Set-Mailbox Support –ForwardingSmtpAddress $null
If you do not want anyone in your domain to be allowed to forward, or to only allow forwarding to specific approved domains, you will want to see Help Topic: Manage Message Forwarding with Remote Domains.
Option 2: Forwarding for a simple email address (without a mailbox)
This scenario is slightly more advanced, but may be necessary if the following conditions are true:
You have no need for a mailbox.
You have no desire to keep a copy of emails in Office 365 (for example if you need a history of emails that have been forwarded).
You have no need for an Office 365 (Microsoft Online) account for this email address (example, there is no need to sign into Lync Online or SharePoint Online).
You do not want to utilize an Exchange Online license for the email address (if this is your only requirement, keep in mind that you have options of using either a cheaper Kiosk license, or a free “Shared mailbox”).
Though an Exchange Online mailbox license is not required, an Exchange Online Protection license may be required for this scenario as you are using Office 365 for anti-spam and anti-malware protection.
The steps for this scenario can only be completed by the organization’s administrator.
Note: These steps are NOT valid for Hybrid scenarios where an on-premises Active Directory is synchronized with the Office 365 directory. In that case, you will create the appropriate object type from the Exchange Management Console on premises and let the synchronization occur.
Administrator steps:
Please note that if temporary (short term) forwarding is the goal, it is much easier for the end user to set forwarding on their own mailbox themselves. Tenant admin setting forwarding implies that this is a longer-term configuration change, as additional objects need to be created in the organization.
The following steps need to be performed by a user that has administrative rights on your tenant organization.
1. Log into the Office 365 portal.
2. Click on Admin. Then click Exchange from the drop down list. If you have Office 365 for Small Businesses, you will not have this option. Instead, follow the instructions here to access the Exchange Admin Center (EAC).
3. Under the Recipients section, click on the Contacts section and then press the + sign to create a new contact:
5. Choose the Mail User from the list of available options:
6. Fill out the details for the new external user; make sure to specify the external email address that you want to forward the email to, to be listed under “External email address” field. Then press Save:
7. Go back to the Mailboxes section, and you should see the list of your users mailboxes. Select the mailbox that you want to set the mail forwarding for and press the “EDIT” button:
8. Under Mailbox Features in the properties of the user, scroll downward until you reach the Mail Flow section. The first section deals with Delivery Options. Click on “View Details” option.
9. Check the “Enable forwarding” checkbox and then press the “Browse” button. Then select the Mail User object you created above and press “OK”:
10. Press “OK” and then Save to close all of the remaining dialog boxes.
At this time, you are done! From this point on, any email that is sent to the “nonadmin” user will be forwarded to the “externaluser1” which will effectively send it to the external email address of someone@contoso.com (in our example).
Advanced Options
These options are not commonly recommended, but are presented in case one of the above options does not quite fit your needs.
If you wish to forward to multiple destination email addresses, then a distribution group may make more sense. You can create multiple MailContact objects (“External Contacts”) and then add these to a Distribution Group object. Distribution groups can either be set to allow external emails or not. In addition, you may wish to make sure that bounce messages can be sent to the either the originator or to a separate mailbox. Otherwise, if there is a problem with the delivery to the destination, no one will know and the message will simply be lost. By default, these values are set to false, and messages may disappear without a bounce.
Get-DistributionGroup test* | fl *report*
ReportToManagerEnabled : False
(ManagedBy can be set to a mailbox, and bounces sent to this mailbox)
ReportToOriginatorEnabled : False
(If set to True, bounce messages will be sent back to the originator)
Although extremely rare, a shared mailbox can be utilized instead of a regular mailbox. This has the advantage that multiple users can easily be configured to access the contents. The steps are similar to option #1, but you’ll first need to configure the shared mailbox following the guide Create a public email alias in Office 365. The guide will take you through setting up the mailbox for delivery and shared access. Any one that can then login to the mailbox should be able to configure forwarding for it by first opening that mailbox and then configuring options for it. Because the mailbox is smaller, however, it may fill up sooner and you may need to periodically check to make sure it isn’t nearing full.