(FORTUNE Magazine) – You're doing all you can to save for retirement--and the government keeps nibbling away at it. The much ballyhooed new tax laws ease some of that frustration by allowing would-be retirees to stash more of their assets in tax-deferred accounts. That, of course, exposes a greater portion of your savings to the magic of compounding.

We won't touch it till you do. The most basic change affects the vast majority of taxpayers--and anyone who can afford to take advantage of it should: The amount employees can contribute to tax-sheltered 401(k)s climbs from $10,500 a year today to $15,000 by 2006. Under a new rule, those 50 and older can play "catch-up" by stowing away an additional $1,000 in 2002 and up to $5,000 by 2006.

The self-employed can retire too. Just because you work for yourself shouldn't mean you'll always have to work. Benefits attorney David Crutcher, a partner at Thelen Reid & Priest in San Francisco, points out that new laws dramatically increase the amount sole proprietors can contribute to simplified employee pension plans (SEPs). Next year a self-employed person earning $200,000, for example, can sock away up to $40,000, tax-deferred. That's nearly twice the amount currently permitted.

Retiring--despite college bills. Your kid makes it into Harvard and--forget about retirement--you're mowing lawns to pay for it. A common nightmare. To avoid it, Stewart Welch III, a certified financial planner in Birmingham, Ala., suggests taking advantage of a big change to the state-sponsored tuition plans known as 529s. Your college savings can grow tax-free--until now, taxes were merely deferred until withdrawal. (Chances are your retirement fund could use the extra cash.)

Tax-deferred is not tax-free. Though the new laws greatly expand how much you can put into tax-deferred accounts, they don't do much for tax-free ones. (The main change: The amount those making $95,000 or less can contribute to a tax-free Roth IRA rises from $2,000 today to $5,000 by 2008. Those making more than $110,000--$160,000 if married--still can't take advantage of Roth IRAs at all.) Financial advisor Kyra Morris of Charleston, S.C., adds that it makes little sense to put all your assets in tax-deferred accounts: When you pull them out, you'll get hit with a nasty tax bill. And that's one retirement gift no one needs.