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Abstract We present theoretical justification for distorted Ruddlesden–Popper (RP) phases of the first-order by using hybrid density functional theory (DFT) calculations and group-theoretical analysis. We, thus, demonstrate the existence of the Jahn–Teller effect around an Fe $$^{4\texttt {+}}$$ 4 + ion in Sr $$_{2}$$ 2 FeO $$_{4}$$ 4 . On the calculation side, we have established a combination of Wu–Cohen (WC) exchange and Perdew-Wang (PW) correlation in a three-parameter functional WC3PW, giving the most accurate description of Sr $$_{2}$$ 2 FeO $$_{4}$$ 4 from the comparison of three hybrid DFT functionals. Self-consistently obtained Hartree–Fock exact exchange of 0.16 demonstrates consistent results with the experimental literature data. Importantly, we explain conditions for co-existing proper and pseudo-Jahn–Teller effects from the crystalline orbitals, symmetry-mode analysis and irreps products. Moreover, phonon frequency calculations support and confirm the results of symmetry-mode analysis. In particular, the symmetry-mode analysis identifies a dominating irreducible representation of the Jahn-Teller mode (X2+) and corresponding space group (SG) of ground state structure (SG Cmce model). Therefore, the usually suggested high-symmetry tetragonal crystal structure (SG I4/mmm model) is higher in energy by 121 meV/f.u. (equivalent to the Jahn-Teller stabilization energy) compared with the distorted low-symmetry structure (SG Cmce model). We also present diffraction patterns for the two crystal symmetries to discuss the differences. Therefore, our results shed light on the existence of low-symmetry RP phases and make possible direct comparisons with future experiments.