Just as Roth IRAs and 401(k) plans transformed the way we save for retirement, a pair of tax-advantaged savings accounts are evolving into the preferred ways for parents to save for their children's college bills.

Last year, Congress sprinkled holy water on state-sponsored college-savings plans (also known as 529 plans, after the section of the tax law that bestows all the breaks). Starting in 2002, earnings in such accounts are simply, and gloriously, tax-free. In earlier years, earnings grew tax-deferred and were taxed in the student's lower tax bracket when the money was spent on college bills.

All but three states offer 529 plans. In most, you choose from a slate of investment options, such as mutual funds that offer a portfolio that's heavy on stocks when your children are young and shifts toward bonds later on. You needn't choose your own state's plan: 34 states allow any U.S. resident to open an account, and all states let you use the money at any accredited college in the United States, plus some foreign schools. In addition to tax-free earnings, about 20 states ice the cake with a state-tax deduction for residents' contributions.

If you're looking outside your home state, consider the plans offered by Utah and Iowa (both run by Vanguard), New York (run by TIAA-CREF) and Nebraska (run by Union Bank and Trust). The first three college-savings plans stand out for their parsimonious expenses, and Nebraska's plan is exceptional because of its broad range of investment choices.