Into a large bowl, measure cereal; set aside.
In a large microwave safe bowl, combine the peanut butter, chocolate chips, and butter. Microwave in bursts of 15 seconds, stirring in between each burst for 15 seconds until the mixture is melted and smooth. Add in the vanilla and salt. Pour over the prepared cereal. Stir well until the cereal is evenly coated.
Pour the cereal mixture into a gallon sized ziplock bag and pour the powdered sugar over it. Seal and shake until the cereal is evenly coated.
Remove into a large bowl and stir in the M&Ms. Separate into even amounts in the snack sized ziplock bags.