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We have a handful of users that require a company email address and have all emails forwarded to an external address; usually they are third-party contractors and only need email.

Since these users never login to a workstation and may or may not log into OWA, their passwords will expire.

When the password expires, will the forwarding stop?

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up vote 2 down vote accepted

No, the forwarding will not stop. They simply would not be able to log directly into their company mailbox using Outlook/OWA. So no worries!

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