A majority of new Roth IRAs started in 2012 were started with contributions from the account holder rather than from rollovers from employer-sponsored retirement plans, according to a study by the Investment Company Institute (ICI) released Monday.

Seventy percent of Roth IRAs started in 2012 were opened exclusively with contributions in contrast to traditional IRAs, which largely are created through rollovers from employer-sponsored retirement plans, such as 401(k) plans, says The IRA Investor Profile: Roth IRA Investors’ Activity, 2007 – 2012.

The study analyzes the conversions, rollovers, withdrawals, asset allocations and account balances of 2.5 million Roth IRA investors who had accounts every year from 2007 through 2012, and 5.1 million Roth IRA investors who had accounts at the end of 2012. The main difference between Roth and traditional IRAs is that with a Roth IRA taxes are paid up front on contributions and conversions, and withdrawals generally are tax-free in retirement, while with traditional IRAs, contributions are tax-deductible if income requirements are met and withdrawals are taxed.

“The use of Roth IRAs has grown significantly since their introduction in the late 1990s and they have become an important tool for Americans to save for retirement,” says Sarah Holden, ICI senior director of retirement and investor research. “The availability of both traditional and Roth IRAs provides flexibility for households to manage the timing of taxation of their retirement accumulations.”

In recent years, nearly $20 billion of contributions has flowed into Roth IRAs each year. In any given year, more than three in 10 Roth IRA investors make contributions to their accounts. In 2012, 30.3 percent of Roth IRA investors aged 18 or older contributed, and more than four in 10 investors who contributed did so at the legal limit, ICI says.

Roth IRA conversion activity tended to shift in direct response to tax rule changes. In 2010, when income limits on conversions were lifted and taxpayers could choose to spread out taxes on conversions made in 2010 over the next two years, more than 5 percent of Roth IRA investors made conversions into their Roth IRAs, compared with less than 2 percent in 2008 and 2009.