I am looking at an individually designed plan which states that employee contributions to a SEP excludable from gross income under Code Section 408(k)(6) are not treated as annual additions.
Is this correct?
If so, could an employee receive the full 415 contribution in the employer's profit sharing plan AND defer $15,500 to the employer's SEP?

No (as to making a full Section 415 contribution to a PSP & also deferring an additional $15,500 to an SEP). First of all, no salary reduction contributions can be made to a SEP unless it is a SARSEP which was in place prior to 1997. Second, the exclusion from Section 415 for SARSEP employee contributions is an exclusion from consideration in the annual additon calculation as an employee contribution, but the deferral would still be considered an employer contribution and therefore would be included in the Section 415 calculation.

Notice the wording of the flush language of IRC Section 415©(2): "For the purposes of this paragraph, employee contributions under subparagraph (B) are determined without regard to . . . ". The plan document probably has comparable language. From what I can determine, this is an historical issue: SARSEP employee deferrals were, prior to the Tax Reform Act of 1986, considered to be IRA contributions which were deducted from compensation under IRC Section 219, and therefore were not considered an annual addition. Now, SARSEP employee deferrals are treated like 401(k) deferrals (i.e., as employer contributions) which are excludable from compensation and are considered an annual addition. But I can't figure out why that language is still in Section 415©(2)--maybe someone else knows.

Sieve, nice reply.

Elective contributions under 408(k)(6) are now excluded from a participant's gross income under Code Section 402(h). As a general rules, all SEP contributions (including excess elective contributiuons)are treated as employer "annual addition" contributions under Code Section 415 (rather than as "employee contributions").

[See Treas. Reg. Secs. 1.415©-1(a)(2)©, 1.415©-1(b)(1)(ii), 1.415©-1(b)(2)(i), 1.415©-1(b)(6)(ii)©]