The advent of induced pluripotent stem cells (iPSCs) revolutionized human genetics by allowing us to generate pluripotent cells from easily accessible somatic tissues. This technology can have immense implications for regenerative medicine, but iPSCs also represent a paradigm shift in the study of complex human phenotypes, including gene regulation and disease. Yet, an unresolved caveat of the iPSC model system is the extent to which reprogrammed iPSCs retain residual phenotypes from their precursor somatic cells. To directly address this issue, we used an effective study design to compare regulatory phenotypes between iPSCs derived from two types of commonly used somatic precursor cells. We find a remarkably small number of differences in DNA methylation and gene expression levels between iPSCs derived from different somatic precursors. Instead, we demonstrate genetic variation is associated with the majority of identifiable variation in DNA methylation and gene expression levels. We show that the cell type of origin only minimally affects gene expression levels and DNA methylation in iPSCs, and that genetic variation is the main driver of regulatory differences between iPSCs of different donors. Our findings suggest that studies using iPSCs should focus on additional individuals rather than clones from the same individual.