OP, I'm so glad you posted this. We are in a similar position. My sister committed suicide three years ago when my son was 2 1/2. We have not told him yet but we are generally quite open about the fact that she has died, that we miss her, talking about the different toys she gave him, etc. It's a fine balance between not hiding it and not creating a ghost who hovers over his life. I really want to tell him about the suicide but have so far held off. I feel that at this point, I would be telling him for me, not for him, and there is no real reason to share this right now. That said, I will never lie about it. If he asks specific questions I will be open. I feel that there have been enough secrets in my family and I don't want to create any more. I expect we will tell him in the next couple years, as it comes up naturally. My philosophy has been to follow his lead and not go beyond whatever questions he's asking.
We have spoken informally to a couple "professionals" and frankly I've found it disappointing. His teacher was appalled that we would even consider sharing this with a child so young; my own therapist thinks we should wait but admits she knows nothing about child psychology; a school psychologist felt we should wait until he is a teenager and then share only because it is relevant medical history. I tend to feel that these perspectives accentuate the shame and stigma around suicide and (except possibly in the case of my therapist) do not reflect the reality of how children see the world and the best way to build bonds with them. The fact is, if my sister had died in a car accident or of cancer, my son would already know her cause of death. I really hate that because she killed herself we are expected not to share this. It's not clear to me that sharing with young children is damaging to them, but at the same time I don't know enough to emphatically say that it's not, so I've held back. We have taken him on suicide prevention walks and explained that other people there are walking for people whom they loved and who died, but again, we do this without mentioning suicide.
The American Foundation for Suicide Prevention has some good information about talking to children about suicide.
http://www.afsp.org/coping-with-suicide-loss/where-do-i-begin/helping-children-understand They recommend openness even at very young ages. I have two friends who have lost brothers and both told their young children (around age 5/6) the cause of death and the manner of death (a gun in both cases). Both felt it was unquestionably the right thing to do, and several years later have no regrets. It has been an ongoing conversation with their children and they have seen no signs that their children have been traumatized or negatively affected by learning this information.
For others who have told their children about a suicide in the family, I am curious exactly how you described it and what you said. It's a really tough issue and I wish it weren't so. It's hard enough to live with this loss as it is.