This paper investigates the optimal design of hybrid automatic repeat request with incremental redundancy (HARQ-IR) over arbitrarily correlated Rician fading channels for goodput maximization. With practical consideration of both the channel time correlation and line-of-sight (LOS) links, theoretical analysis and optimal design of HARQ-IR become very challenging. To address them, asymptotic outage analysis is first carried out to not only gain meaningful insights but also facilitate the optimal design. With simple forms of asymptotic expressions derived, joint optimization of the transmission powers and rate aiming at goodput maximization under average total transmission power constraint is enabled and solved analytically. The optimal goodput is also derived in closed form, with which meaningful insights can then be extracted. Particularly, the scaling law of the optimal goodput with respect to the transmit signal-to-noise ratio is found, and the harmfulness of time correlation and the benefit of LOS links are revealed. Finally, the analytical results are validated through extensive simulations.