In USA, almost all tournaments have upper limit, but no bottom limit. You will see U1200, U1500, and etc. You can always choose to play up, but can't choose to play down. To give your child more challenge , you should choose one section above your child's level. For example, if your child is 1100, which means s/he can play in both U1200 and U1500, you should pick U1500.
When your child is young, your focus should not be the prize money, especially when the prize is only couple of hundreds. You should get the best training for your child, that's playing up. Do not expect s/he will win the section. It will reduce her/his pressure. S/he may surprise you by outperforming her/his level.
If s/he only plays the lowest section available, s/he may not perform as good as you expected. S/he might lose to lower rated opponents by carelessness. Even if s/he won the section, her/his improvement is small. S/he might even lose rating points if her/his rating is much higher than others. On the contrary, if s/he plays up, s/he might gain rating points by winning or drawing even one game. It's in fact less effort than trying to win every game.
Fast progress at young age is especially important, because her/his interest depends on her/his progress. If s/he can not progress for one or two years at low level, most likely s/he will quit.