In C. elegans, the conserved transcription factor DAF-16/FOXO is a powerful aging regulator, relaying dire conditions into expression of stress resistance and longevity promoting genes. For some of these functions, including low insulin/IGF signaling (IIS), DAF-16 depends on the protein SMK-1/SMEK, but how SMK-1 exerts this role has remained unknown. We show that SMK-1 functions as part of a specific Protein Phosphatase 4 complex (PP4SMK-1). Loss of PP4SMK-1 hinders transcriptional initiation at several DAF-16-activated genes, predominantly by impairing RNA polymerase II recruitment to their promoters. Search for the relevant substrate of PP4SMK-1 by phosphoproteomics identified the conserved transcriptional regulator SPT-5/SUPT5H, whose knockdown phenocopies the loss of PP4SMK-1. Phosphoregulation of SPT-5 is known to control transcriptional events such as elongation and termination. Here we also show that transcription initiating events are influenced by the phosphorylation status of SPT-5, particularly at DAF-16 target genes where transcriptional initiation appears rate limiting, rendering PP4SMK-1 crucial for many of DAF-16's physiological roles.