In the bowl of a stand mixer fitted with the whisk attachment, combine confectioners’ sugar and meringue powder on low speed, about 10 seconds.
Add the vanilla to the water and slowly add it to the dry ingredients while mixing. At first the icing will be very liquid-like.
Continue to mix it at medium-high speed until it is fluffy and stiff peaks form, about 7-10 minutes. Stop the mixer as soon as the icing becomes stiff (mixing times are approximate).¹
Put icing in different bowls and mix with food coloring of your choice. Transfer to pastry bags with desired tip and ice away!
Notes
Over mixing and oil-containing extracts can keep the icing from setting up, so keep this in mind as you work.
It is best to ice sugar cookies the day after you bake them. This keeps the oils (aka butter) in the cookies from seeping into the icing.