Pour the rice Chex into a large bowl and set aside
Put the chocolate chips, peanut butter, and butter in a medium saucepan and cook over medium heat until the mixture is smooth. This should take about 8 minutes. Remove from heat and add the vanilla.
Pour this over the cereal and stir to coat all pieces. Let it cool for a few minutes.
While the mixture is cooling, add 1 cup of the powdered sugar to a large Ziploc bag. Pour in half of the Chex mixture and shake so that all pieces are coated with powdered sugar. Pour this into a fresh bowl and repeat the process with the rest of the powdered sugar and Chex mixture.
Add the M&Ms and stir to combine. Serve, or store in a tupperware container or mason jars.