How can I create a distribution list in Okta that can be synced to Office 365? Currently if I add a new group with Office 365 as an associated application it only creates a Security group in Office 365. My Office 365 Provisioning Type within Okta is set to UNiversal Sync.
The only way the distribution lists can be managed via Okta is making use the Universal Sync provisioning. However, they will be read in AD and pushed directly to O365 - they cannot be managed in Okta in any way.
In short, Okta groups cannot be manually created and then pushed to O365 as distribution lists.
You can however suggest this on the Okta Community by using the 'Suggest a feature' option at the bottom of the Okta admin console. Features suggested in our community are reviewed and can be voted and commented on by other members of the community, therefore making it much easier for the engineering team to understand the priorities that you have for feature requests.