In early grades our school only allows teachers to assess DRA up to one grade level above current grade. For example, when DD was in second grade at the end of year, her teacher tested her to end of year for third grade. However, the same teacher verbally explained to me that she was confident DD could have gone several grades higher if she had been allowed to continue. As I understand it, this "one grade higher" policy is quite common.
Definitely get some answers around the policy at your specific school. Luckily in third grade our school has given up DRA and guided reading levels altogether for kids that aren't struggling readers.
