I’ve been trying to solve for this same issue. Not sure if my solution is what you are looking for, but felt sharing might help?
From what I can tell, the Metahuman Clothing LOD Settings file is setup to remove fewer bones than the Metahuman LOD Settings. It appears to me, that the skeleton the SKM is using when imported to UE, may matter on which LOD setting you use. What i’ve done to fix on my end, is choose the Metahuman Base Skeleton when importing clothing SKMs, and then make sure to use the Metahuman LOD Settings, and it does not distort.