Most children who are ready for kindergarten are able to begin formal reading instruction.  Formal reading instruction refers to specific lessons to teach decoding that involve learning letter/sounds, undertaking exercises to acquire the skills to blend isolated sounds together to form words, and providing sufficient repetitions of words so that the child will be able to read these very rapidly and without sounding them out.  
When working with 5-year olds, it is important to keep lessons to 15-30 minutes in length.  When working with a group, 15 minute lessons are advisable.  When working individually with a teacher, many kindergarten age students are able to work for 20-30 minutes at a time.  A very large number of 5 year olds will be able to make excellent progress with just 15 minutes a day of formal ABeCeDarian instruction as part of a set of rich experiences in which the child is read many books and has the opportunity to talk about a variety of topics with knowledgeable and interesting adults and older children.

Some 4-year-olds and even 3-year-olds show interest in learning how to read.  It will do no harm to do the ABeCeDarian lessons with such interested children provided that the lessons are extremely brief, roughly from 1 to 5 minutes in length.  When working with such young children, it is very important that the teacher take the cue from the child and let her move on to another activity as soon as she is ready.  In other words, it is not a good idea for the parent to have a set-amount of time for each lesson and make the very young child stick to that.  

Forcing such a young child to do reading lessons is likely to be counterproductive:  The child does not have the attentional skills or cognitive skills to benefit from the lessons, and, moreover, the inappropriate work is likely to lead the child to dislike reading.  In addition, lessons for 4- and 3-year olds should not involve any handwriting because children this age to not yet have the fine motor skills to write well.  Plenty of time should be spent developing these fine motor skills with scissors work, beading, making marks on paper with crayons, and the like.  

The most important literacy activities to do with students of this age are to spend daily time reading and re-reading books to them, and to converse with them frequently.  In addition, children this age need plenty of play, both outdoors involving running around and building things in sand boxes and making mudpies, and indoors involving big blocks, little blocks, and make-believe.  These are also important activities for 5- and 6-year-olds as well.