In the United States it's recommended 2 years. The law in most states is only 1 year, but it is MUCH safer for your child to be rear facing, as forward facing in an accident can easily cause paralysis or break your child's leg's if the seat in front of them breaks. Always check the directions on your car seat, as each carseat differs in weight limits. The new standards that just came out say that the child and the car seat must be under 65 lbs. to use the latch system and regardless you should ALWAYS use the top latch system, even if you're using the belt. If you have an awesome seat, like ours (Diono Radian) you can rear face your child for longer than 2 years. My daughter is tall for her age and still rear faces at 3 1/2. For the Diono the height limit I believe is 44". That's why it's so important to read your manual. It will tell you just how long you can rear face safely :) When turning your child forward facing, depending on your manual, your child should still be wearing the chest straps on the seat up to age 5 before turning the seat into a booster.
We have Radians. My 30lb 4 y/o is still RF with plenty of weight and height ahead of her before she turns around. My 40lb 6y/o could still be RF, too, but he was in a seat with a lower height/weight limit when we turned him at 4.5 or 5, so we are keeping him FF in his new Radian.
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Crunchy wife to my high-school sweetheart, mama to DS (10/23/05) , DS (11/22/07) , DD (3/9/10) , and DS (5/26/12), and three babies in Heaven.
ETA - I would *love* a car seat which rear-faced to 45lb. We bought the seat with the longest rear-facing limit in Australia when DD1 was born and it was only 12kg (26.5lb). We made it to 2y3mo with her.
Mother of two spectacular girls, born mid-2010 and late 2012
Yes, as long as the seat allows. One of my dds was small enough to stay rf until about 3 1/2. My current 19mo is huge and I don't think we are going to make it that long.
I agree, it's best to rear-face as long as the seat will allow. Personally I wouldn't listen to a pediatrician's advice because I don't think they have any training or certification in car seat safety. And even if they did they would need to update it continually as things are always changing with new seats coming out, new requirements (like the above-mentioned LATCH limits), etc.
Personally my DD is about to turn 3 and still RF-ing in her Radian, she weighs 40 lbs (the seat will go up to 45 lbs). One thing that really made an impression on me is crash-test videos like this one where you can clearly see the comparison between what would happen to a forward versus rear facing child in a car seat:
You might be surprised by the limits of seats! The Graco "clones" (Fit 4 Me, My Size, Headwise, Contender...) will rear-face any child to 40 pounds and costs $120-180. There are several seats that will get even large children to 3-3.5 rear-facing.
Check out thecarseatlady.com for all your car seat questions. She Is really knowledgeable and helpful!
ETA: Once we read and learned about how important having our children ride rear-facing is... we went out and bought the safest car seat with the highest weight/height limit for our kids to ride rear facing. It was by far our most expensive baby purchase (especially since we dont have much *stuff* or a crib, and just buy things on craigslist) but when it comes to safety, I say there is no skimping. also, I learned about the Importance of having a car seat properly Installed so we take ours to an official car seat Installation place and have It professionally Installed. I'm sure you can google one in your area. They usually take place at police departments. Hope this helps!