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Considering the growing demand for high-rate data services, the capacity of optical fibers has to be exploited close to its theoretical limit. In addition to techniques mitigating dispersions, coherent detection and polarization multiplexing (PolMUX) as well as forward error correction (FEC) using high-rate block codes are already applied. However, to approach channel capacity, multi-level signaling for high spectral efficiency is mandatory. Orthogonal frequency division multiplexing (OFDM) in combination with multiple-input/multiple-output (MIMO) PolMUX equalization is a straightforward approach to cope with dispersions. Since higher modulation formats like 16-QAM and beyond are increasingly sensitive to noise, additional FEC for optical OFDM, also referred to as coded optical OFDM (CO-OFDM), has to be considered for a bit error rate (BER) <; 10-15 In order to achieve a performance close to the capacity limit, we apply an additional high-rate inner code to protect the multi-level signaling scheme, so-called bit-interleaved coded modulation (BICM), in combination with soft demapping and iterative decoding techniques. In this contribution the design principles of a BICM system using iterative demapping and decoding (BICM-ID) and its promising performance will be discussed.