This sounds like the same thing we were going through last year, except that I thought my son should have repeated L4, as he is still a 6yo this year. 
Starting last spring, I kept pushing for a repeat, and coach kept saying to wait and see how he progressed.  In the end, both coaches felt DS was too advanced for L4 (I don't agree, but I'm also not a coach), and DS was adamant that he wanted to move up even if it meant no medals. 
He has earned a few medals this season, but I still wonder if it would have been better to repeat.  He struggles with confidence and has some meet anxiety.  He will definitely spend another year at L5.
I do wish that I had communicated with the coaches better earlier in the process.  They were looking at it strictly in terms of skills, and I was more concerned about his age and confidence level.  By the time I got someone to listen to me it was too late.  DS had assumed the identity of L5, and there was no going back.