Email forwarding problems

Just transfered a domain name to dreamhost last week and now am trying to set up email forwarding.
I went into mail > manage email
created a new forewarding email address so goes to my actual email address. Waited a few hours for it to be put into place, but when I tried to send an email with it I get this error:

Technical details of permanent failure:
PERM_FAILURE: SMTP Error (state 9): 550 relay not permitted

Is there something else I should have done?