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The Little League Rulebook lays out the age rules for divisions in Regulation I(a). This is meant to be the maximum age range permitted for flexibility, but leagues are allowed and encouraged to narrow these as they see fit. There are lots of good ways to do this, based on the needs and desires of your league.
This document focuses on the division up to Majors, and a separate document focuses on the Teenage divisions above Majors.
D52 makes the following suggestions:
Keep T-Ball to 5-6, and place all 4 year olds in a separate less-structured wiffle ball division.
Use 3 year overlapping age ranges in Minors when possible. This allows kids to play in a league based on their age and skill level.
If your league is big enough, we suggest 4 minors divisions, as follows. This provides the advanced players a single year in each division and provides age ranges of 3 years.
If you are not big enough to do this, then we suggest 3 minors divisions, as follows:
For our smallest leagues, 2 minors divisions: