In a stand mixer, fitted with a whisk attachment, combine powdered sugar and meringue powder.
Add vanilla and turn the mixer on low. Slowly add the water and mix on low until all of the powdered sugar has mixed into the water. Then turn on high and beat until the frosting starts to thicken and increase in size.
Turn off the mixer and lift the whisk out of the frosting. The frosting should flow like ribbons back down into the bowl. If it’s too stiff, add more water.
Divide the frosting into four separate bowls and color each of them a different color.
When the cookies have cooled, add a little bit of each color of frosting to the cookie. (If the frosting has thickened from sitting, just add a little more water, a teaspoon at a time).
Use a toothpick to gently swirl the frosting. (I told my kids, swirl, don’t mix!) Then add sprinkles on top.
Once all the cookies have been decorated, let sit until dry. (I let mine dry over night because the frosting was so thick!)