In a large microwaveable bowl, melt chocolate chips, peanut butter, and butter in the microwave at 30-second intervals until completely smooth. Be sure to stir well between each interval.
Place rice Chex cereal in a large bowl.
Pour melted chocolate over cereal and stir carefully until all cereal is coated.
In a gallon size Ziploc bag, add 1/2-3/4 cup powdered sugar. Add 1/4 of the chocolate-coated cereal. Seal the bag and toss to coat.
Repeat the above process until all cereal is in the bag and coated in powdered sugar.
Gently shake in m&m's.
Serve immediately, or store in an airtight container in the fridge.