The IRA concept is simple: Open an account, fill it with money, tell Uncle Sam whether you want to pay taxes on it now or later, and let it ride until retirement.

So simple, yet so many people manage to mess it up. So how can you idiot-proof your most important retirement investment? Here are five humble suggestions:

1. Stop ignoring the little things.
Fifty basis points -- that's no big whoop, right? That's just half a percentage point, for crying out loud. 

Crying out loud is exactly what you'll be doing if you let little things like 50 basis points add up over the years. Take a $10,000 investment earning a compounded average annual return of 12.5% and one earning 12% -- that's right, 50 basis points less. After 20 years, the investment earning 12% will amount to just under $96,500. Hold your touchdown dance. Add in that trickle of extra returns over the years, and you end up with $105,500.

That's roughly the difference between investing in Procter & Gamble (NYSE:PG) 20 years ago, versus buying shares of PepsiCo (NYSE:PEP). Both were great stocks for shareholders who held for decades. But P&G turned out to be just a little bit better -- and that turned into a substantial amount of extra money for its investors.

On the same note ...

2. Don't overpay The Man.
You might want to blame your bad investment luck on the market or your dentist's not-so-hot stock tips. But while you're pointing a finger, remember that three others are pointing right back at you. (Then there's the thumb, which appears to be blaming the cat.) If you fail to factor in the fees you pay to invest -- brokerage fees, fund management fees, even subscriptions to investment newsletters -- then you aren't calculating your real returns.

Nowhere is fee-padding more evident than in the mutual fund industry (even if you're not paying capital-gains taxes on frequent trades made within the fund, as is the case when you invest within an IRA). Many actively managed domestic-equity mutual funds charge management fees of 1.5% or more. You saw what half a percentage point did to your returns above. Imagine the bite that 1.5% -- compounded annually -- would take.

Even index funds aren't immune from fee creep. If you're buying a plain old index mutual fund like the total stock market index fund or one that tracks the S&P 500, make sure you don't get hoodwinked into paying more than 1% in fees for something you can get for 0.2% or less. After all, a big stock index holds the same shares of AT&T (NYSE:T) and Microsoft (NASDAQ:MSFT) -- why pay more?

3. Avoid overdosing on accounts.
Maybe you can't be too rich or too thin, but you can have too many IRAs. Let's say that every time you change jobs, you roll the 401(k) money from your previous employer's retirement plan into a self-directed account. According to Department of Labor stats, Americans switch jobs once every four years. In a 44-year career, that translates into 11 rollovers -- potentially at different brokerage firms, if you're not organized.

Account overload can cause confusion for even the sharpest investors. Failure to know where your money is may cause you to miss important distribution deadlines and get socked with major penalties. That's right: Uncle Sam makes you start taking moola out of your IRA at age 70 1/2. Should you neglect to do so, the IRS will take 50% of what you should have withdrawn -- and you won't even get a handwritten thank-you note.

4. Keep your hand out of the cookie jar.
Consulting firm Hewitt found that nearly half of workers cash out their 401(k) plans when they leave their jobs. According to another survey, the average age of workers who cashed out their plans was between age 37 and 40 -- decades before retirement. Hello? What part of "retirement plan" don't you understand? Retirement money is (say it with me) for retirement.

Uncle Sam agrees. If you touch that money before age 59 1/2, he will fully tax your distributions as ordinary income and slap you with another 10% penalty just to get the message across. If you're wondering, the right way to handle an old 401(k) is to transfer your assets into an IRA or roll them into your new employer's plan.

And finally, the No. 1 Big Kahuna way to idiot-proof your IRA ...

5. Don't dis dividends.
Running after hotshot stocks like Google (NASDAQ:GOOG) was all the rage two years ago -- before the roof fell in on the market. If you ignore dividends, however, you're snubbing superior returns for the long run. Long-term studies show that dividend-paying stocks have had considerably higher returns than nonpayers.

The reason for this market-thumping performance is that dividend-paying stocks tend to be quality companies with defensible moats that generate growing free cash flow. And these aren't granny stocks we're talking about, either. For instance, if you'd bought $2,000 of Coca-Cola (NYSE:KO) stock back in 1979, you'd be sitting on more than $140,000 in shares today by reinvesting dividends. The same investment in Wal-Mart (NYSE:WMT) would have made you a millionaire.

There are even ETFs (exchange-traded funds, which trade like stocks) like iShares Dow Jones Select Dividend Index that go after good dividend performance with an indexing approach. The point is that there are plenty of places to shop for stocks that pay you back.

Idiot-proof your retirement
These are just five ways you can save your IRA, but there are more, to be sure. There are so many, in fact, that my colleague Robert Brokamp devotes ink in each issue of the Motley Fool's Rule Your Retirement newsletter to identifying and fixing what ails your IRA and other investments. Check it out free with a 30-day trial.

Google is a Motley Fool Rule Breakers pick. Coca-Cola, Microsoft, and Wal-Mart are Motley Fool Inside Value recommendations. Coca-Cola, PepsiCo, and Procter & Gamble are Motley Fool Income Investor recommendations. The Fool owns shares of Procter & Gamble. Try any of our Foolish newsletters today, free for 30 days

This article, written by Dayana Yochim, was originally published Sept. 1, 2005. It has been updated by Dan Caplinger to reflect today's fashions. He owns none of the companies mentioned. You don't need bifocals to read The Motley Fool's disclosure policy. Our rules are written clear as day.