The protein is soluble in water. Whether you dissolve it in water or a buffer depends upon what else is present in the powder. If it was lyophilized from a buffer, you just need to add water. If it was lyophilized from water (salt-free), you should dissolve it in a buffer. Consult the supplier to find out how the powder was prepared and how best to prepare it for use and storage.
Storing frozen protein solutions in the -20 freezer may be OK in the short term. It depends on the protein and the storage medium. It also depends on the type of freezer. Frost-free freezers should not be used, because they periodically warm up. Freezers sold for laboratory use are generally not frost-free and are therefore better for storing protein solutions. Eventually, however, the ice at the surface of the frozen solution will sublime, forming frost, and leaving dry protein and salts behind, which is undesirable because it could cause loss of activity of the protein. That is why I recommend only short term storage of frozen protein solutions at -20. It is better to store frozen protein solutions at -80 or in liquid nitrogen for long-term use.
For some proteins, it may be acceptable to store the protein in 50% glycerol at -20, which will keep it from freezing. This can be quite convenient because you can just pipet the amount you need from the tube without having to thaw it out. For proteinase K, however, you have to consider the problem of auto-proteolysis. If it isn't frozen, the protein will eventually degrade itself unless it is stored under conditions in which it is inactive.