Good judgement should be used by the coaches and parents. I have had kids 1st year win 3 novice tournaments and I ask them and their parents to consider entering lower level open tournaments.
At that point they do not need to move up - but they will only get as good as the competition they are wrestling. I have a couple of kids in their 3rd and 4th year who never won a match or just finally place 3rd or 4th in a novice and have a couple of wins under their belts. Doesn't mean they are not progressing - it just means it may take them a little longer to develop. General rule of thumb - 2 years of novice and then move up in the 3rd year.