In the bowl of a food processor fitted with blade attachment, add almond paste and 1/2 cup confectioner’s sugar; pulse until almond paste and sugar are well mixed and texture resembles finely ground cornmeal. In a large bowl, cream butter and remaining confectioners’ sugar until light and fluffy. Add almond paste mixture and beat until fully incorporated. Beat in the egg, milk and vanilla. Combine flour and salt; gradually add to creamed mixture and mix well. Cover and refrigerate for 1 hour.
Preheat oven to 375°. On a lightly floured surface, roll out dough to 1/4-in. thickness. Cut out using floured 2-1/2-in. round cookie cutter. Place 1 in. apart on parchment-lined baking sheets. Bake until light golden brown and firm, 8-10 minutes. Let stand for 2 minutes before removing to wire racks to cool.
In a large bowl, whisk confectioners’ sugar, water, meringue powder and water for icing; whip until light and airy, adding water if needed to reach desired consistency. Divide icing into thirds; leave one portion white. Tint remaining portions as desired. Place icings into piping bags fitted with fine round tips. Pipe icing onto cookies to create poker chip design. Let icing dry completely. Store in an airtight container.