Yes, you should have contacted them about explicitly obtaining a return of the excess contribution.
What you received is a regular distribution, not a return of contribution before the due date of your tax return and a regular distribution is not a proper way to have dealt with this. The problem is that a return of contribution before the due date of your tax return is required to have been accompanied by any investment gain or loss, with only the investment gain being subject to income tax (and to an early-distribution penalty).
You might be able to file a substitute Form 1099-R (Form 4852) to explain how this distribution could be interpreted as a return of contribution, but doing so would require you taking into account any investment gain (which would have resulted in some amount of the excess contribution remaining in the SEP-IRA and subject to a 10% excess contribution penalty on Form 5330 unless you could somehow treat the remaing excess as a regular traditional IRA contribution) or loss (which would have resulted in the distribution being a combination of a return of contribution before the due date of your tax return and some amount of regular distribution). However, I'm not aware of any case where the IRS has actually accepted this way of disputing the reporting on the Form 1099-R. Without such an interpretation, you may still have the excess contribution subject to the 10% excess-contribution penalty and a regular distribution subject to the normal tax and 10% early-distribution penalty.
Since the contribution was made in 2020, there is some potential to have treating what would have been an excess contribution for 2019 as a contribution for 2020 instead, provided that you had already accumulated enough net earnings in 2020 to have support a SEP contribution of that amount. The IRA custodian reports SEP contributions to the IRS as to the year in which the SEP contributions are made, not the year for which the contributions are made.
I generally don't ask for specific dollar amounts on this public form, but was the dollar amount of the excess SEP contribution substantial?
Putting a zero in box 2a will cause TurboTax to treat the distribution as a return of excess contribution after the due date of your 2019 tax return, including extensions. This could be an alternative since the Form 1099-R does not report the timing of the distribution, and would require explanation. Doing this, you would still owe the 10% penalty for 2019 on a 2019 Form 5330. TurboTax does not support Form 5330.
