How can I open up a retirement account (tax deferred) for my toddler?

My research has taught me that I can't open an IRA for my toddler because it needs to be opened with earned income (of course a toddler does not earn income). Further, I can't simply open a Mutual Fund in his name b/c come college time, that amount will count against him if he needs loans (plus taxes and fees will eat at a regular mutual fund - that's why we don't use them for retirement savings outside of a retirement account that shields us from taxes). So, is there a vehicle out there we can put some money into for my toddler's retirement? An annuity perhaps? Thanks.