Just to clear up any confusion for anyone who happens to stumble across this thread with the same issue, here is the fix for Blender:
When exporting the the model from blender in the FBX format, you can select one of the follow three types of smoothing:
1. **Edge**
2. **Face**
3. **Normals**
In the past, only Edge and Face worked (didn’t bring up the smoothing error in UE4), but it now seems that any of the three work just fine.