In a small bowl, microwave chocolate chips, peanut butter, and butter for 1 minute. Stir and microwave for 30 seconds or until the chocolate is melted. Stir in the vanilla extract until smooth.
Pour the melted chocolate mixture over the cereal. Stir until the cereal is evenly coated.
Pour the chocolate-covered cereal into a large zip-top bag. Add the powdered sugar and seal the bag. Shake the bag until the cereal is evenly coated with powdered sugar. Toss in M&M's candy and pretzels. Add in more or less toppings to preference.
Spread the coated cereal mix on a large parchment or wax paper-lined baking sheet. Let the chocolate set before transferring it into an airtight container.